Par value definitions
| Word backwards | rap eulav |
|---|---|
| Part of speech | Par value is a noun phrase. |
| Syllabic division | par val-ue |
| Plural | The plural of the word "par value" is "par values." |
| Total letters | 8 |
| Vogais (3) | a,u,e |
| Consonants (4) | p,r,v,l |
Par value is the face value of a security or a bond. It represents the nominal or original value of the security which is determined by the issuer at the time of issuance. This value remains constant throughout the life of the security and does not change with market fluctuations.
Par value is important as it helps to determine the minimum price at which a security can be issued or traded. It also serves as a reference point for calculating interest payments on bonds and for determining the redemption value of the security at maturity.
Understanding Par Value
When a company decides to issue bonds or stocks, it assigns a par value to each unit of the security. This value is typically set at $100 or $1,000 for bonds, while for stocks it is usually set at $1. Investors can buy these securities at par value, above par value, or below par value depending on market conditions.
Significance of Par Value
Par value provides a cushion for investors in case the market price of the security falls below its face value. It also helps in determining the capital structure of a company, as it indicates the minimum amount of capital that a company must raise through stock or bond issuance.
It's important to note that par value does not reflect the true market value of a security. The market price of a security is influenced by factors such as supply and demand, interest rates, and economic conditions, among others. Therefore, investors should not solely rely on par value when making investment decisions.
Par value Examples
- The par value of the company's shares is set at $1 per share.
- The bond was issued at a par value of $1,000.
- Investors should be aware of the par value of the securities they are buying.
- The par value of the preferred stock was $100.
- The company decided to issue new shares at a par value of $5 each.
- Bonds with a par value of $500,000 were due to mature next year.
- The par value of the asset was significantly higher than its market value.
- The par value of the property was used as a benchmark for taxation purposes.
- The par value of the loan was agreed upon by both parties before signing the contract.
- Stock options were granted with a par value of $10 to employees.