In stock-market terminology, what does a stock's par value represent?

In stock-market terminology, a stock’s par value is the nominal value assigned to a share when it is issued.

Par value is a legal or accounting figure rather than a prediction of what the share should trade for. A company may set a very small par value, such as $0.01, and later see its shares trade for many times that amount in the market. The market price is determined by trading and investor expectations.

Par value historically helped define the minimum amount for which a company could issue shares. Modern corporate law often makes the figure less economically important, and many corporations issue no-par-value stock where local rules permit it.

Par value should not be confused with book value, which relates to accounting equity, or market capitalization, which equals share price multiplied by shares outstanding. It also differs from a bond’s face value, the amount typically repaid at maturity.