PAR VALUE Meaning and
Definition
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Par value is a financial term that refers to the face value or nominal value of a bond, stock, or other financial instrument. It is the stated value of an instrument as determined by the issuer and is often expressed as a specific amount per share or unit. Par value is typically established at the time of issuance and remains constant throughout the life of the instrument.
In the case of stocks, par value represents the minimum price at which shares can be sold by the issuing company and is unrelated to the market value. It is primarily used to determine the legal capital or the minimum amount of capital that a company must maintain in its corporate accounts. Bonds, on the other hand, use the par value to calculate interest payments and the principal amount that will be returned to the investor upon maturity.
Although par value is still commonly used as a legal requirement in some jurisdictions, it has become less relevant in many modern financial markets, where share prices are determined by supply and demand forces. In such cases, the market value of a stock or bond may deviate significantly from its par value.
Overall, par value acts as a reference point for investors, regulators, and financial institutions, providing a standard value against which other aspects of an investment can be evaluated.
Common Misspellings for PAR VALUE
- oar value
- lar value
- pzr value
- psr value
- pwr value
- pqr value
- pae value
- pad value
- paf value
- pat value
- pa5 value
- pa4 value
- par calue
- par balue
- par galue
- par falue
- pare value
- par vadue
Etymology of PAR VALUE
The term "par value" originated from the Latin phrase "par", meaning equal or at face value.
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