stock?
February 22nd, 2010 | by admin |MIZZ.TIP asked:
the hamilton brush company issued 2,500 shares of commom stock worth $100,000.00 total.what is the par value of each share?
the hamilton brush company issued 2,500 shares of commom stock worth $100,000.00 total.what is the par value of each share?
A.25.00
B.40.00
C.400.00
D.250.00
3 Responses to “stock?”
By Kir on Feb 24, 2010 | Reply
if this is for school, the answer is $100,000/2500sh = B; however, that is also totally WRONG in the real world. Most stock today is issued as low-par or no-par value…so the real answer is E) $0.
By crosseyedlemon on Feb 25, 2010 | Reply
This question is a bit confusing since you seem to be asking two different things. “Par value” would indicate that you want to know the value if the shares were bought in 100 group lots. D would be the right answer in that case. The value of a single share on the other hand would be B.
By BigDog507 on Feb 28, 2010 | Reply
Par Value is the selling price orignally asked when a stock is first issued. Assuming that the stock is “worth” the par valueat the time it is issued then the answer is B but par value for a stock doesn’t always reflect the worth of a stock. Stocks are bought and sold most of the time at over par although they can be bought under par sometimes. Par Value doesn’t change but the worth does. If a company issues 1,000,000 shares of stock at par of $5 they generate $5,000,000 of capital to use for their company. If in the next 5 years the company is growing and investors think the company will continue to grow and pay good dividends they may be willing to pay $10 per share for the stock. The company does not get this money and the Par Value doesn’t change. Some of the investors who bought the original shares at $5 may be willing to sell them for $10. They are the ones who make the gain.