There is a direct relationship between the par value and market value of common stock: stocks with a low par value have a low market value, while stocks with a high par value have a high market value.Group startsTrue or False
Question
There is a direct relationship between the par value and market value of common stock: stocks with a low par value have a low market value, while stocks with a high par value have a high market value.Group startsTrue or False
Solution
False. The par value of a stock does not necessarily have a direct relationship with its market value. The par value is the nominal or face value of a stock as stated by the company in its corporate charter, while the market value is determined by the supply and demand for the stock in the market. A stock's market value can be much higher or lower than its par value.
Similar Questions
A common stock's value is typically set at a low amount and has little meaning today other than being used to by some states to assess fees. (Enter only one word per blank.)
In the stockholders’ equity section of the balance sheet, common stock is listed before preferred stock.Group startsTrue or False
True or false: Some states allow corporations to issue no-par value common stock.
The par value or stated value of stock represents the amount of legal capital that a corporation must maintain for the protection of the creditors. This statement is
The Common Stock account increases when treasury stock is resold for more than its original cost.Group startsTrue or False
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.