Mega Computer issued stock with a face value of one cent and then sold the shares to the public for $20.00 each. Ted bought 10 shares at that price. Today, Ted sold his shares to David for $25.00 each. What is the par value of the stock?
A) $20.00
B) $25.00
C) $5.00
D) $19.99
E) $0.01

Question

Quizplus · Accepted Answer

The par value of the stock is the face value of each share which, in this case, is one cent. The fact that Mega Computer sold the shares to the public for $20.00 each and that Ted bought them at that price does not affect the par value. Similarly, the fact that Ted sold his shares to David for $25.00 each is irrelevant to the par value. Therefore, the correct answer is E) $0.01.

Mega Computer Issued Stock with a Face Value of One