Question

Tyler bought 100 stocks of a company that had a positive growth potential. He bought them in the secondary market for $15. However, the stock certificate shows the value to be $10. What does this amount represent?

The value of $10 showing on the stock certificate is the __________ value.

Answer 1

10$ value is the actual value which is also known as par value

Step-by-step explanation:

Given data:

100 number of stocks

market price of stock in secondary market - $15

stock value show in certificate is - $10

This 10$ value is the actual value which is also known as par value

Total income gain by seller is $5

Therefore stock sell lower than $15 one will experience a loss and when stock sell higher than $15 one will experience a profit

Answer 2

The correct anwer is: "face value".

The face value of a security is the one indicated by its issuer, which can be different from the price paid for it in the secondary financial markets. If speaking about stock, the face value is the original cost of the stock written on the certificate.

If the stock is acquired at a lower price than the face value, it is purchased at discount. In the opposite situation, it is acquired at premium. If price and face value are equal, the stock or security is purchased at par.