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TeachMeFinance.com - explain Par
historic definition...Par -- The face value.
On the New York Stock Exchange if the face value of a
stock is $100 it is at par when it is selling at 100. It is above
par when it is selling at a higher price, as 101 ; it is below par
when it is selling at a lower price, as 99. Half-stock (stock
of the face value of $50) also is at par when it is quoted at 100,
which in this case means $50. The face value of a stock Is
divided into 100 parts for quotation purposes, no matter what
the face value may be, and each part is called 1 per cent or 1
point (or a point). Therefore, when a half-stock is quoted at
101 it is 1 above par, which means that the stock is worth
$50.50 a share-; when it is quoted at 99 it is 1 below par, which
means that the stock is worth $49.50 a share. The same
principle applies to quarter-stock (stock of the face value of
$25) and, in brief, to stock of any face value.
In some markets stocks are quoted in dollars instead of by
percentage. Thus, in such markets if a stock of the face value
of $100 is selling at 100 it is at par; if selling at 101 it is 1
above par; if selling at 99 it is 1 below par. Likewise, if a
stock of the face value of $50 is selling at 50 it is at par ; if selling
at 51 it is 1 above par; if selling at 49 it is 1 below par.
So, also, if a stock of the face value of $25 is selling at 25 it is
at par; if selling at 26 it is I above par; if selling at 24 it is
1 below par; and so on.
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