Which of the following statements about par value is FALSE?
A)The par value per share is used to determine the dividends per share for common stock.
B)The stated value of a stock is conceptually similar to the par value of a stock.
C)It is generally illegal for a corporation to sell an original issue of common stock below the par value.
D)The par value is the maximum legal liability of stockholders if the corporation cannot pay its debts.

Question

Quizplus · Accepted Answer

Par value is a nominal value assigned to a share of stock by a company's board of directors. It represents the minimum price at which a share of stock can be sold. However, par value has no relationship to the dividends paid on common stock. The dividends are determined by the company's board of directors and can be paid out of the company's earnings or retained earnings, regardless of the par value of the stock.

Which of the Following Statements About Par Value Is FALSE