The par value of common stock represents:
A)The arbitrary dollar amount assigned to a share of stock.
B)The liquidation value of a share.
C)The book value of a share of stock.
D)The amount received when the stock was issued.

Question

Quizplus · Accepted Answer

The par value of common stock typically represents an arbitrary dollar amount assigned to a share of stock. This amount has no correlation to the market value of the stock or its book value. It is simply a nominal amount set by the issuing company for legal and accounting purposes. It does not reflect the amount received when the stock was issued nor does it necessarily represent the liquidation value of a share of stock.

The Par Value of Common Stock Represents