Question

The par value or stated value of stock represents the amount of legal capital that a corporation must maintain for the protection of the creditors. This statement is _______.True / False.

Answer 1

True

Step-by-step explanation:

This is the value of stock or share that was set by the owners of a corporation at the point of registration of the company. It is the price that is stated in the corporation's article of association and also in the share certificate. The par value of a share has no relationship with the market value as they can be far apart.

The par value is a value specified by law for the protection of the people who might want to extend credit to the corporation.