Moneyzine
Contents

Par Value

Moneyzine Editor
Author: 
Moneyzine Editor
1 mins
September 20th, 2023
Advertiser Disclosure

Definition

The financial accounting term par value is used to describe the stated, or printed, value of a security. Par values can be assigned to bonds as well as common and preferred stocks.

Explanation

Par values are commonly found on bonds, and represent the dollar value to be paid to the bondholder when the security matures. Most federal and corporate bonds are issued with par values equal to $1,000. The par value of a bond, along with the coupon rate, will determine the interest income due the bondholder.

Preferred shares of stock are also issued with significant par values. Like bonds, the par value of preferred shares is used to determine the dividends paid to each shareholder.

The par value of common stock represents the maximum responsibility that a company has to a stockholder in the event the company is dissolved. Par value then becomes the nominal value, or minimum value, at which a share of stock can be issued.

The par value of a stock has nothing to do with its market value. Today, many common stocks are issued with par values that are less than $1.00. The total par value of stock issued by a company can be found in the owner's equity section of the balance sheet.

Related Terms

balance sheet, owner's equity, additional paid-in capital, par value stock, no-par stock

Explore Investing Further

Related Content

  • Biden Or Trump: Who Is Better For The Economy And Stocks?
    Yup. This is one of those articles. It's an election year, and here in the U.S., we get to decide which old dude who’s been alive long enough to remember when there were only 48 states in the U.S. will be the leader of the free world.
    March 19th, 2024
  • When it comes to strategic business planning, accounting is front and center, shaping the course of action. At least it should be.
    March 14th, 2024
  • DRIP Brokers: Best Brokers for Dividend Investing for November 2024
    Reinvesting dividends could mean compound growth for your portfolio. But reinvesting them manually can be a hassle. This is why you could benefit from a dividend reinvestment plan (DRIP).
    March 12th, 2024
  • How To Invest in Real Estate Without Becoming a Landlord
    We all know that in order to build wealth and prepare for retirement, investing is the key. However, it can be hard to figure out what to invest in and how to put your money to good use. One of the most talked about ways to build wealth is owning property and being a landlord to bring in passive income. But what if you don’t want to do that? You can still invest in real estate!
    March 6th, 2024
  • Investing In Nature: The Closest You'll Get To Your Money Growing On Trees
    ESG (Environmental, Social, and Governance) has become a polluted word for many traders and investors - but that doesn't mean it's going completely away. Nor does that mean you can't profit from nature or sustainable practices. But there are some opportunities in the regenerative ag, conservation, and green real estate spaces.
    February 29th, 2024

Contributors

Moneyzine 2024. All Rights Reserved.