Wednesday, November 17, 2021 12:56:50 AM
Par Value vs. Market Value: What's the Difference?
https://www.investopedia.com › ... › Financial Analysis
• Par value is the price of a financial instrument at the time it is issued while its market value is the price it is worth to buyers and sellers at any given ...
What Is Par Value Stock?
Par value -- an antiquated legal and accounting concept -- is still mandated by the corporation laws of some states.
The term par value can be misleading because it has nothing to do with how much a corporation's shares are actually worth. It is only a minimum legal value. A corporation's board of directors may require investors to pay far more than par value for the corporations' shares. For example, you can establish a par value of $.01 per share, but require investors to pay $10 per share. In other words, you can sell your stock for whatever the market will bear. If your incorporated business proves successful, your shares should become worth far more than their par value.
Stock
The par value of stock has no relation to market value and, as a concept, is somewhat archaic.[when?] The par value of a share is the value stated in the corporate charter below which shares of that class cannot be sold upon initial offering; the issuing company promises not to issue further shares below par value, so investors can be confident that no one else will receive a more favorable issue price. Thus, par value is the nominal value of a security which is determined by the issuing company to be its minimum price. This was far more important in unregulated equity markets than in the regulated markets that exist today,[when?] where stock issuance prices must usually be published. The par value of stock remains unchanged in a bonus stock issue but it changes in a stock split.
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