What is Par Value
What is Par Value?

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What is Par Value?

The Par Value of a stock is the share price below which the issuing Corporation promises not to issue further shares. In most situations, the Par Value will also be the initial trading price for the stock when it is introduced in the open market place.

Par Value assures investors that no one else is receiving a more favorable issue price. The market price of a stock has no relation to Par Value. The Board of Directors of a Corporation usually sets Par Value.

Par Value allows a Corporation to put a de minimis value for the stock on the corporate financial statement. The Par Value of a stock can affect it's tax treatment.

Some states allow shares to be issued with no Par Value. No Par Value stocks have "No Par Value" written on the stock certificates.

Par Value is typically different from the market price. If the market price is higher than the Par Value, the difference is called a "premium", if it is lower, the difference is called a "discount".
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