par value

Securities and FinanceLegal glossary term

Legal Definition

Par value is the monetary face amount of a security, typically a stock or bond, which represents the initial price at which the security is issued. It is the fixed dollar amount that determines the nominal value of the security, often used in financial calculations and legal documentation.

Plain-English Translation

Imagine a piece of paper that represents money; the par value is the exact dollar amount printed on it when it first comes to life. It's the official price tag for the security.

Context in Contracts

It matters because it establishes the base unit for financial calculations, determining the principal amount of debt or equity. It is crucial in legal documents to define the terms of a security issuance or debt obligation.

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Understand par value fast

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01

A bond issued with a par value of $100 per unit.

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The initial price set for a security issuance.

Document context

How par value shows up in legal documents

What is it?

The par value is the fixed monetary value assigned to a security, such as a stock or bond, which is the initial price at which the security is issued and represents the nominal value of the security.

Why does it matter?

It matters because it establishes the base unit for financial calculations, determining the principal amount of debt or equity. It is crucial in legal documents to define the terms of a security issuance or debt obligation.

When does it matter?

It usually appears when discussing the initial pricing of securities, such as in bond issuances, capital structure analysis, or when calculating the face amount of a security.

Where is it usually seen?

It is typically seen in legal documents related to securities offerings, bond indentures, financial agreements, and corporate finance disclosures.

Who is affected?

The issuer (the company selling the security) and the investor are affected; it defines the initial terms under which the security is priced and the principal amount of debt or equity.

How does it work?

In practice, the par value dictates the nominal dollar amount of a bond. For example, if a bond has a par value of $100, that is the base unit used for calculating interest payments or determining the total principal amount.

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Wikipedia

Par value

In finance and accounting, par value means stated value or face value of a financial instrument. Expressions derived from this term include at par (equal to par value), above par (greater than par value), below par (smaller than par value) and no-par (has no...

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Disclaimer: We do not provide legal advice. We translate legal language into plain English and help you prepare for a conversation with a lawyer.