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Simple English definitions for legal terms
Par
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A quick definition of Par:
Par: Par refers to the par value of a financial instrument, which is the face value or the amount that the instrument is worth at the time of issuance. It is the minimum price at which the instrument can be issued or traded. For example, if a bond has a par value of $1,000, it means that the bond will be issued or traded at a minimum price of $1,000.
A more thorough explanation:
Par
Par refers to the face value of a bond or stock. It is the price at which the security was issued and is usually set at $100 for bonds and $1 for stocks.
For example, if a company issues a bond with a par value of $1000, it means that the bond will be sold to investors for $1000. Similarly, if a company issues 1000 shares of stock with a par value of $1, it means that the company will receive $1000 from the sale of those shares.
Another example is if a bond is trading at a premium, it means that the market value of the bond is higher than its par value. Conversely, if a bond is trading at a discount, it means that the market value of the bond is lower than its par value.
The definition of par is the face value of a bond or stock. The examples illustrate how par value is used in the issuance and trading of securities. The first example shows how the par value is used to determine the price at which a bond or stock is issued. The second example shows how the market value of a bond can be higher or lower than its par value, which affects its trading price.