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Simple English definitions for legal terms
stated value
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A quick definition of stated value:
Stated value refers to the value of a financial instrument or security that is shown on its face, such as the dollar amount assigned to a stock share or the principal of a bond. It is also known as par value, face amount, face value, or nominal value. In the past, par value was important because it indicated the amount for which shares would be issued, but today it serves only a minor function and is not an indication of the price at which shares are issued, except that the price must be equal to or greater than par value for shares of common stock with a par value.
A more thorough explanation:
Definition: Stated value is the value of an instrument or security as shown on its face. It is the arbitrary dollar amount assigned to a stock share by the corporate charter or the principal of a bond. It is also known as par value, face amount, face value, or nominal value.
Example: A company issues 100 shares of common stock with a par value of $10 per share. The stated value of each share is $10. This means that the company has assigned a value of $10 to each share of stock.
Explanation: Stated value is the value assigned to a security by the company that issues it. In the example above, the company has assigned a par value of $10 to each share of common stock. This means that the company has determined that each share of stock is worth $10. However, the actual market value of the stock may be higher or lower than the par value. The par value is important because it sets a minimum price for the stock. The price of the stock cannot be lower than the par value.