TeachMeFinance.com - explain Par
par -- the situation in which the face value of a security equals its actual selling price: sold "at par."
Par -- Equal. An equality between the face value of a bill of exchange, share of stock etc., and its actual market value. If it can be sold for more, it is "above par;" if for less, it is "below par."
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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