Interpreting stock value is a very important part of investing in the stock market in general. Many investors get confused with the difference between the par value and stated value of a stock. Here are the basics of the stated value of a stock and how it affects investors.

Stated Value

The stated value of a stock is a monetary value that is assigned to a share of stock by the corporation. The stated value has no actual bearing on the market value of the stock itself. This value is assigned strictly for accounting purposes for the corporation that issued the stock. The amount of money that is determined by the stated value of the stock is issued to the capital trading account of a corporation. This is considered the legal capital that a corporation has to work with. It is illegal to pay a dividend or repurchase shares of stock for the corporation if this money is affected negatively.

Stock with a par value has a stated value that is printed on the actual stock certificate itself. This number represents how much an investor paid for the individual share of stock. If a stock does not have a par value, the company can issue it for whatever price they decide.

blog comments powered by Disqus