Question

The par value per share of common stock represents the

a.minimum selling price of the stock established by the articles of incorporation.

b.minimum amount the stockholder will receive when the corporation is liquidated.

c.dollar amount assigned to each share.

d.amount of dividends per share to be received each year.

Answer 1

Answer:a. Minimum selling price of the stock established by act of incorporation.

Explanation:

The price of stock are initially stated at the time of incorporation as the sufficient amount necessary to establish the firm and this the par value price of stock. The price change during trading but this is sales or market price, the par value is used in determining the total authorised stock value and it's not usually subject to fluctuations in the market.

The par value is not the minimum amount the shareholders received on liquidation of firm because what they received may be lower than par value of stock, It's not connected to dollar value nor is it dividend to be received each year which is determined mostly annually.