What is Below Par?
How Does Below Par Work?
Now let’s assume that three months have gone by, and the debt when it comes due. Accordingly, the are worth less, say, $800 each. The markets express this price as a percentage of par value, so these are trading at 0.8, or below par. If the were still worth $1,000 each, they would be "trading at 100" or " ."are trading between buyers and sellers in the . Because Company XYZ has recently had to lay off workers and cut its marketing program because it is running short of , the company has become riskier. This, in turn, means that the company is less likely to pay off its
Par value has little significance for equities because it generally does not influence the price itself. The par values for are typically $0.01 per share and are set forth in the 's articles of incorporation. For preferred stock, however, par values may be higher because they are often used to calculate dividends.
Why Does Below Par Matter?
For, is a pricing . When the 's price is below the , the is considered "discounted"; when the 's price is above the , the is considered "at a premium."