What is a Half Stock?
A half stock has a par value that is 50% of what is considered normal.
How Does a Half Stock Work?
Let's assume the par value of a share of preferred stock is usually $100. Company XYZ issues preferred stock with a par value of $50, making it a half stock.
Why Does a Half Stock Matter?
Half stock is more popular with preferred shares: The shares' dividends often hinge on the size of the shares' par values. Half stocks might also have reduced claims on company assets in the event of bankruptcy, as liquidation distribution is often dependent on par value.
