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Simple English definitions for legal terms
nominal value
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A quick definition of nominal value:
Nominal value: The value of something that is written on it, like the amount of money a stock or bond is worth. It's also called par value or face value. It used to be important because it was the price at which shares were issued, but now it's not as important. The only rule is that the price of a share of common stock with a par value must be equal to or greater than the par value.
A more thorough explanation:
Definition: Nominal value, also known as par value or face value, refers to the arbitrary dollar amount assigned to a security or instrument, such as a stock share or bond. It is the value of the security as shown on its face.
Examples:
- A company issues 1,000 shares of common stock with a par value of $1 per share. The nominal value of each share is $1.
- A bond with a face value of $1,000 has a nominal value of $1,000.
These examples illustrate how nominal value is the value assigned to a security or instrument, and is often used as a reference point for pricing and issuing shares or bonds.