1. What is Par Value of Stock?

Definition: Par value is the nominal or face value of a stock as assigned by the issuing company.

Purpose: It represents the minimum price at which shares can be issued and helps determine legal capital.

2. How Does Par Value Work?

The par value is simply the assigned value:

Key Points:

• Set by the company during incorporation
• Often set very low (e.g., $0.01 per share)
• Has little relation to market value

3. Importance of Par Value

Details: While mostly symbolic today, par value affects legal capital requirements and can impact accounting and legal considerations.

4. Using the Calculator

Tips: Simply enter the assigned value per share that the company has determined for its stock.

5. Frequently Asked Questions (FAQ)

Q1: Is par value the same as market value?
A: No, par value is arbitrary while market value is determined by supply and demand.

Q2: Why do companies set low par values?
A: Low par values provide flexibility in pricing shares and minimize legal capital requirements.

Q3: Can par value change?
A: Yes, through corporate actions like stock splits, but this requires shareholder approval.

Q4: What's the difference between par value and no-par value stock?
A: No-par stock doesn't have an assigned value, giving more flexibility in pricing.

Q5: Where can I find a company's par value?
A: In the corporate charter or on the stock certificate.