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Par Value

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Par Value
Par value (also known as nominal value) is the face value of a Security.
    
The Par value of a Security - whether a stock or a Debt instrument - needs to be distinguished from both its issue price and its market price. Par value is a nominal value of a Security which is determined by an issuer company at a minimum price. Par value of an Equity (a stock) is a somewhat archaic concept. 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. This was far more important in unregulated Equity markets than in the regulated markets that exist today.
    
Most 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 commonly used), 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.
Posted by  Privatebanking.com
 
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