Term of the Day Tuesday, December 6, 2016

par

Definition

The nominal dollar amount assigned to a security by the issuer. For an equity security, par is usually a very small amount that bears no relationship to its market price, except for preferred stock, in which case par is used to calculate dividend payments. For a debt security, par is the amount repaid to the investor when the bond matures (usually, corporate bonds have a par value of $1000, municipal bonds $5000, and federal bonds $10,000). In the secondary market, a bond's price fluctuates with interest rates. If interest rates are higher than the coupon rate on a bond, the bond will be sold below par (at a "discount").
If interest rates have fallen, the price will be sold above par. here also called face value or par value.

Use par in a sentence

We had a lot of par and that made everyone in our company feel good and excited to continue with our venture.

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The par amount associated with the bond was negligible in comparison to the coupon payment we were expecting to receive.

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When I received a stock certificate from my company I was shocked to see the low price listed on the certificate, but my broker assured me that was just a listing of the par value and had no relation to how much the share was worth on the market.

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