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Par Value

Glossary

Par value is the face value of a bond or stock, set by the issuing company or government at the time of issuance. It does not necessarily reflect the market price but serves as a reference for financial transactions.

Par Value in Bonds:

  • Represents the amount repaid to bondholders at maturity.
  • Commonly set at $1,000 per bond for corporate and government bonds.
  • Determines coupon payments, which are based on a percentage of the par value.

Par Value in Stocks:

  • A nominal value assigned to shares, often set at $0.01 or $1 per share.
  • Has little relevance in modern stock pricing but is used for legal and accounting purposes.

While par value is crucial in bonds, it's mostly symbolic in stocks, as their market value fluctuates based on supply, demand, and company performance.