Par value of shares means the __________ value of the sharesa)Actualb)facec)Marketd)dividendCorrect answer is option 'B'. Can you explain this answer?

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Grade 11 Exam > Grade 11 Questions > Par value of shares means the __________ valu...

Par value of shares means the __________ value of the shares

a)
Actual
b)
face
c)
Market
d)
dividend

Correct answer is option 'B'. Can you explain this answer?

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Verified Answer

Par value of shares means the __________ value of the sharesa)Actualb)...

Par value of shares means the face value of the shares:

The par value of shares refers to the nominal or face value of each share of stock issued by a company. It is the value assigned to the shares at the time of their issuance and is typically stated on the stock certificate.

Here are some key points to understand:

Par value: Par value is a fixed amount assigned to each share of stock by the company. It represents the minimum price at which the shares can be issued.

Face value: Par value is also known as the face value of the shares. It is the amount that the company guarantees to repay to the shareholders in the event of liquidation.

Legal significance: Par value has legal significance in some jurisdictions, as it may determine the minimum capital requirement for companies.

Market value: Par value is different from the market value of shares, which is determined by supply and demand in the stock market. Market value fluctuates based on various factors such as company performance, investor sentiment, and economic conditions.

Dividend calculation: Par value is relevant for calculating dividends, as dividends are often expressed as a percentage of the par value.

Therefore, the correct answer is B: face. Par value of shares represents the face value or nominal value of the shares issued by a company.

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