Par Value finance definition (2024)

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FAQs

What does par value mean in finance? ›

Par value is the face value of a bond and determines a bond or fixed-income instrument's maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par, depending on factors such as the level of interest rates and its credit status.

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What is par value Quizlet? ›

Par Value. Also known as the face value of the bond, the par value is the sum of money that the corporation promises to pay at the bond's expiration.

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What is the meaning of at par value? ›

Summary. The term “at par” means at face value. Par values are normally constant, as opposed to market prices, which fluctuate with consumer demand and interest rate movements. Par values are generally fixed at 100, in lieu of 100% of the face value of the $1,000 bond.

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What best describes par value? ›

Par value is the face value of a bond or a share of stock. Par value is set by the issuer and remains fixed for the life of a security—unlike market value, which fluctuates as a stock or bond changes hands on the secondary market.

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What does par stand for in finance? ›

What Is at Par? The term "at par" means at face value. A bond, preferred stock, or other debt instrument may trade at par, below par, or above par. Par value is static, unlike market value, which fluctuates with credit ratings, time to maturity, and interest rate fluctuations.

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What is a good par value? ›

A typical par value is $0.00001. There is very little meaning to par value; nevertheless, because it does still have an impact on the annual franchise tax amount for Delaware corporations, you want to choose a very small number.

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Which of the following is the definition of par value? ›

Par value is the value of a single common share as set by a corporation's charter. It is not typically related to the actual value of the shares. In fact it is often lower. Any stock certificate issued for shares purchased shows the par value.

How do you calculate at par value? ›

'Common Stock at Par' and 'Preferred Stock at Par' are calculated by adding the total liabilities to the shareholders' equity then dividing that by the number of shares issued.

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Does par value mean fair value? ›

The "par value" or "face value" of a company's stock is the lowest price at which it can be sold, while the value of shares on the market "Fair Value" refers to the price at the moment of selling.

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Whats does par mean? ›

an equality in value or standing; a level of equality: The gains and the losses are on a par. an average, usual, or normal amount, degree, quality, condition, standard, or the like: above par; to feel below par.

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What is the difference between par value and cost? ›

The cost method uses the market value paid by the company during a repurchase of shares and ignores their par value; under this method, the cost of the treasury stock is included within the stockholders' equity portion of the balance sheet.

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What is another word for "on par"? ›

be on a par (verb as in touch) Strongest matches. approach come to. Strong matches. amount equal match meet parallel rival tie.

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What is par value in finance? ›

The par value of a bond, also called the face amount or face value, is the value written on the front of the bond. This is the amount of money that bond issuers promise to repay you at a future date. It is fixed at the time of issuance and, unlike market value, it doesn't change.

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Why does par value matter? ›

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.

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What is a synonym for par value? ›

synonyms: face value, nominal value.

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What does $100 par value mean? ›

Most bonds have a par value of $100 or $1,000, but businesses and governments can issue bonds at any denomination they choose. For stocks, par value is stated on the corporate charter. The par value for stocks is the lowest price at which the company will sell its shares, and it's typically set very low.

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What is the difference between price and par value? ›

The price for a bond or a note may be the face value (also called par value) or may be more or less than the face value. The price depends on the yield to maturity and the interest rate. The "yield to maturity" is the annual rate of return on the security. In both examples, the yield is higher than the interest rate.

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What is the par value of apple? ›

Because of this, most companies set a par value for their stocks at a minimal amount, such as Apple Inc., which has a par value of $0.00001 per share.

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What is par value vs fair value? ›

The "par value" or "face value" of a company's stock is the lowest price at which it can be sold, while the value of shares on the market "Fair Value" refers to the price at the moment of selling.

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