Par Value Explained: Stock Market Basics for Investors

Chapter 14, Problem 4

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QUESTION:

Par value of a stock refers to the ________.

A. issue price of a stock

B. value assigned by the incorporation documents

C. maximum selling price of a stock

D. dividend to be paid by the corporation

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Par Value Explained: Stock Market Basics for Investors
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Discover the concept of "par value" in the stock market and its significance in corporate finance. Understand the difference between issue price, selling price, and dividends. Grasp the foundational knowledge essential for savvy investing.

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Questions & Answers

QUESTION:

Par value of a stock refers to the ________.

A. issue price of a stock

B. value assigned by the incorporation documents

C. maximum selling price of a stock

D. dividend to be paid by the corporation

ANSWER:

Step 1 of 2

Stocks: When the company is established or incorporated, it issues a certain number of shares or provides the subscribing option to the investors. Such units of shares are termed as stock to the company. It acts as financial security for the company to raise funds, as they can be bought and sold.

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