Replies to post #300229 on Mr Cooper Group Inc (COOP)

[mattchew]

Par valueFrom Wikipedia, the free encyclopediaJump to: navigation, search
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Par value, in finance and accounting, means stated value or face value. From this comes the expressions at par (at the par value), over par (over par value) and under par (under par value).

The term "par value" has several meanings depending on context and geography.

[edit] BondsA bond selling at par has a coupon rate such that the bond is worth an amount equivalent to its original issue value or its value upon redemption at maturity. This amount is typically $1000 per bond.

[edit] StockPar value stock has no relation to market value and, as a concept, is somewhat archaic. The par value of a stock was the share price upon initial offering; the issuing company promised not to issue further shares below par value, so investors could be confident that no one else was receiving a more favorable issue price. Thus, par value is a nominal value of a security which is determined by an issuing company as a minimum price. This was far more important in unregulated equity markets than in the regulated markets that exist today.

Par value also has bookkeeping purposes. It allows the company to put a de minimis value for the stock on the company's financial statement.

Many common stocks issued today do not have par values; those that do (usually only in jurisdictions where par values are required by law) have extremely low par values (often the smallest unit of currency in circulation), for example a penny par value on a stock issued at USD$25/share. Most states do not allow a company to issue stock below par value.

Even in jurisdictions that permit the issue of stock with no par value, the par value of a stock may affect its tax treatment. For example, Delaware permits the issue of stock either with or without a par value, but by choosing to assign a par value, a corporation may significantly reduce its franchise tax liability.[1]

No-par stocks have "no par value" printed on their certificates. Instead of par value, some U.S. states allow no-par stocks to have a stated value, set by the board of directors of the corporation, which serves the same purpose as par value in setting the minimum legal capital that the corporation must have after paying any dividends or buying back its stock.

Preferred stock par value remains relevant, and tends to reflect issue price. Dividends on preferred stocks are calculated as a percentage of par value.

Also, par value still matters for a callable common stock: the call price is usually either par value or a small fixed percentage over par value.

In the United States, it is legal for a corporation to issue "watered" shares below par value. However, the purchasers of "watered" shares incur an accounting liability to the corporation for the difference between the par value and the price they paid. Today, in many jurisdictions, par values are no longer required for common stocks.

[tularay]

Yeah I was confusing par value in the POS POR with the actual price per share value that would consequently be attributed. Thanks for helping clear it up.