Listen to a Business English Dialogue About No par value stock
Mary: Hi Ruby, have you ever heard of “no par value stock” in finance?
Ruby: No, I haven’t. What is it?
Mary: No par value stock is a type of stock that does not have a designated par value, meaning it doesn’t have a minimum price at which it can be issued or sold.
Ruby: Oh, I see. So, how is the value of no par value stock determined?
Mary: The value of no par value stock is typically determined by market forces, such as supply and demand, investor sentiment, and the company’s financial performance.
Ruby: That sounds different from traditional stocks. Are there any advantages to issuing no par value stock?
Mary: Yes, issuing no par value stock can provide companies with flexibility in setting the initial offering price and may reduce legal and administrative costs associated with setting and maintaining a par value.
Ruby: I see. Are there any potential drawbacks to issuing no par value stock?
Mary: One potential drawback is that it may make it more challenging for investors to assess the stock’s value compared to stocks with a specified par value.
Ruby: That makes sense. Can companies still raise capital by issuing no par value stock?
Mary: Yes, companies can still raise capital by issuing no par value stock, as investors are willing to purchase shares based on the company’s perceived value and growth potential.
Ruby: Thanks for explaining, Mary. No par value stock seems like an interesting concept in the world of finance.
Mary: You’re welcome, Ruby. It’s a concept that offers both advantages and considerations for companies and investors alike.