Common Stock Par Value

Common Stock Par Value Definition

(1) For bonds, the amount that the issuer agrees to pay at the maturity date. Also called the maturity value or face value of a bond.

(2) For common stocks, an arbitrary dollar amount assigned to each share by the company's charter.

Par value has little or no impact on the actual market value of a security. However, it is important in the case of preferred stocks and bonds, since the preferred dividend and interest are often based on the par value assigned to each issue. For example, an 8% bond is a promise to pay that percentage of the bond's par (100% of face value) value annually.

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