Which of the Following Is True About the Par Value

question 39

Multiple Choice

Which of the following is true about the par value of common stock?

• A) It determines the market value of the shares.
• B) It is usually the initial offering price of shares.
• C) The Revised Model Business Corporation Act has eliminated the concept of par value.
• D) Corporations often set a high par value in order to increase the attractiveness of their stock.
• E) Par value represents the minimum price at which shares of stock can be traded after they are initially issued.

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Definitions:

Residual Income

The amount of income that an individual or company retains after accounting for all costs and expenses.

Producer Price Index

An economic indicator that measures the average changes in prices received by domestic producers for their output.