Advanced English Dialogue for Business – No par value stock

Listen to a Business English Dialogue about No par value stock

Jordan: Hi Maya, have you heard about “no par value stock” in business and finance?

Maya: Yes, I have. No par value stock is a type of stock that does not have a designated par value, or stated face value, associated with it.

Jordan: That’s correct. Instead of having a fixed par value, the value of no par value stock is determined by the market demand and supply dynamics.

Maya: Are there any advantages to issuing no par value stock for a company?

Jordan: Yes, there are. Issuing no par value stock can provide flexibility to the company in setting the selling price of the stock and can also reduce legal and administrative costs associated with determining and maintaining a par value.

Maya: I see. So, it simplifies the process of issuing and trading stocks for the company.

Jordan: Exactly. It allows the company to focus on other aspects of its operations without being constrained by fixed par values.

Maya: Are there any drawbacks or risks associated with no par value stock?

Jordan: Yes, there can be. Investors may perceive no par value stock as riskier compared to par value stock because the absence of a fixed value may make it more susceptible to market fluctuations.

Maya: I see. So, investors may be cautious when investing in no par value stock due to the uncertainty of its value.

Jordan: Yes, that’s correct. However, many companies opt for no par value stock to enjoy the flexibility it offers in raising capital and managing their finances.

Maya: Thanks for explaining no par value stock, Jordan.

Jordan: You’re welcome, Maya. If you have any more questions, feel free to ask!