par value
Noun: - The nominal or face value of a security: The value assigned to a share of stock or a bond by the company that issues it. This value is printed on the certificate and represents a formal accounting value, not the price for which it trades on the open market.
Par value is a legal and accounting concept used primarily for corporate shares and bonds. - For bonds, par value (often $1,000) is the amount the issuer agrees to repay the bondholder at maturity. - For stocks, par value is a minimal, arbitrary amount (often $0.01 or $1.00 per share) set in a company's charter, which has little relation to the stock's market price. It is used for accounting purposes, such as recording the stock's issuance in the company's balance sheet.
For Bonds:
- The corporate bond was issued at its par value of $1,000.
- If a bond's market price falls below its par value, it is said to be trading at a discount.
For Stocks:
- The company's common stock has a par value of $0.01 per share.
- The par value of the preferred shares is $100, but they are currently trading for $105 on the exchange.
- "Stated value": A similar concept sometimes used interchangeably with par value for corporate shares, representing a nominal value assigned for accounting.
- "No-par value stock": Shares issued without any designated par value, which is permitted in many jurisdictions. The entire amount received from the sale is recorded as capital.
- Face value: Often used synonymously with par value, especially for bonds and currency.
- Nominal value: Another term for par value, emphasizing its stated, formal nature as opposed to its real market value.
- Face value
- Nominal value
- Stated value
- "At par": A security trading at a price equal to its par value.
- The new bond issue is trading at par.
- "Above par" / "Below par": Trading at a price higher or lower than its par value, respectively.
- Due to high demand, the bond is selling above par.
- The company's financial troubles caused its bonds to trade below par.
-
the value of a security that is set by the company issuing it; unrelated to market value
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