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Par Value

Definition

Par value, in finance and accounting, means stated value or face value. From this come the expressions at par, over par and under par.

What is 'Par Value'

The face value of a bond. Par value for a share refers to the stock value stated in the corporate charter. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. Par value for a bond is typically $1,000 or $100. Shares usually have no par value or very low par value, such as 1 cent per share. The market price of a bond may be above or below par, depending on factors such as the level of interest rates and the bond’s credit status. In the case of equity, par value has very little relation to the shares' market price.

Explaining 'Par Value'

For example, a bond with par value of $1,000 and a coupon rate of 4% will have annual coupon payments of $40. A bond with par value of $100 and a coupon rate of 4% will have annual coupon payments of $4.


Further Reading


Optimal investment with stock repurchase and financing as signals
academic.oup.com [PDF]
This is the one hundred and twentieth number in the series ESSAYS IN INTERNATIONAL FINANCE, published from time to time by the International Finance Section of the Department of Economics of Princeton University. The author, George N. Halm, is professor …

Some aspects of Japanese corporate financeSome aspects of Japanese corporate finance
www.jstor.org [PDF]
This is the one hundred and twentieth number in the series ESSAYS IN INTERNATIONAL FINANCE, published from time to time by the International Finance Section of the Department of Economics of Princeton University. The author, George N. Halm, is professor …

The dangers of shares without par valueThe dangers of shares without par value
www.jstor.org [PDF]
This is the one hundred and twentieth number in the series ESSAYS IN INTERNATIONAL FINANCE, published from time to time by the International Finance Section of the Department of Economics of Princeton University. The author, George N. Halm, is professor …

An empirical comparison of published replication research in accounting, economics, finance, management, and marketingAn empirical comparison of published replication research in accounting, economics, finance, management, and marketing
www.sciencedirect.com [PDF]
This is the one hundred and twentieth number in the series ESSAYS IN INTERNATIONAL FINANCE, published from time to time by the International Finance Section of the Department of Economics of Princeton University. The author, George N. Halm, is professor …

How Does the Par Value of a Share Work?How Does the Par Value of a Share Work?
link.springer.com [PDF]
This is the one hundred and twentieth number in the series ESSAYS IN INTERNATIONAL FINANCE, published from time to time by the International Finance Section of the Department of Economics of Princeton University. The author, George N. Halm, is professor …

The pricing of risky corporate debt to be issued at par valueThe pricing of risky corporate debt to be issued at par value
www.sciencedirect.com [PDF]
This is the one hundred and twentieth number in the series ESSAYS IN INTERNATIONAL FINANCE, published from time to time by the International Finance Section of the Department of Economics of Princeton University. The author, George N. Halm, is professor …

Analyzing convertible bondsAnalyzing convertible bonds
www.jstor.org [PDF]
This is the one hundred and twentieth number in the series ESSAYS IN INTERNATIONAL FINANCE, published from time to time by the International Finance Section of the Department of Economics of Princeton University. The author, George N. Halm, is professor …

Corporate income taxes, valuation, and the problem of optimal capital structureCorporate income taxes, valuation, and the problem of optimal capital structure
www.jstor.org [PDF]
This is the one hundred and twentieth number in the series ESSAYS IN INTERNATIONAL FINANCE, published from time to time by the International Finance Section of the Department of Economics of Princeton University. The author, George N. Halm, is professor …



Q&A About Par Value


What does par value refer to for shares?

Par value refers to the stock price stated in the corporate charter.

What does an inflation-adjusted real value represent?

An inflation-adjusted real value represents goods as if prices had not changed on average.

When do you know if the market price of a bond is above or below its par value?

You know when the market price of a bond is above or below its par if interest rates change and/or credit rating changes.

What is the nominal value of a commodity bundle?

The nominal value of a commodity bundle is the total market value of the commodity bundle, depending on the market price and quantity of each good in the commodity bundle which are current at that time.

How can you compare different types of goods with one another using a price index?

You can use a price index to compare different types of goods with one another.

Is it possible to measure changes in values over time?

Yes, it is possible to measure changes in values over time.

Why are bonds usually issued with a par value of 1 or more than one cent?

Bonds are usually issued with a par value greater than one cent because they have coupon payments that must be paid out at maturity.

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