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Par value generally refers to the amount at which a security is issued or can be redeemed. A bond with a par value of $1,000 can be redeemed at maturity for $1,000. And a bond with an 8% coupon and a par value of $1,000 pays $80 in interest each year.

But par value has no relation to the market value of a stock. A stock with no par value might trade for thousands of dollars. It just depends on what the market deems it’s worth.

The par value of common stock used to be equal to the amount invested, like a fixed-income security. Today, most stocks come with a par as low as 1 cent, or no par value at all.

Why would a company issue shares with no par value? Because it helps corporations avoid a liability to stockholders if its stock’s value tumbles. If a stock was trading at $5 per share, and its par value was $10, the company would theoretically have a $5-per-share liability.

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