The par value of a share of common stock represents the minimum price at which new shares can be sold.All new issues of common stock must have a par value equal to the current market price of the share.

Question

Quizplus · Accepted Answer

The first sentence is correct, but the second sentence is false. There is no requirement for new issues of common stock to have a par value equal to the current market price of the share. The par value is typically a nominal amount and may be set at a level that has no relation to the market price.

The Par Value of a Share of Common Stock Represents