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What is a stock's par value?

A stock's par value, also known as its face value, is the minimum price at which a company can issue and sell its shares. It is typically set when the company is first incorporated and is listed in the company's articles of incorporation.

In the past, par value had more significance than it does today. Originally, par value represented the minimum amount that a shareholder had to pay for a share of stock, and if the company went bankrupt, shareholders would be liable for the par value of their shares.

However, in modern times, par value is largely a technicality and has little bearing on the actual value of a stock. In fact, many stocks are issued with a par value of just a few cents, while their market value may be significantly higher.

In practice, the price of a stock is determined by the total assets divided by the number of shares issued, and is not directly related to its par value. As such, par value is not a useful indicator of a stock's value or performance.

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