Talk:Par value
From Wikipedia, the free encyclopedia
 |
This article is within the scope of the Business and Economics WikiProject. | |
| ??? | This article has not yet received a rating on the assessment scale. | |
| ??? | This article has not yet received an importance rating on the assessment scale. | |
Contents |
[edit] Equities
Previously had this content. The citation is vague and, to the best of my knowledge, while the phenomenon exists, calling this "par value" is totally wrong. If there is a citation for this usage, great, provide it and restore. -- Jmabel | Talk 22:56, 23 November 2005 (UTC)
In classic 1920's terminology, especially prior to the Stock Market Crash of 1929, par value was used as slang for when the price of any stock was selling at $100 per share, or for any even multiple of $100/share, such as $200/share, $300/share, etc. As noted by famed stock and commodity speculator Jesse Livermore, most speculative stocks typically rise an unusually large amount shortly after passing through par values, rising in price slowly from $95/share to $96/share to ... to $100/share, at which point human psychology typically pushes the price much higher in a very short time frame after passing par value. This phenomenon also recurs for every increase of an even $100 in stock price, solely due to human psychology, which ultimately tends to dominate the market over even robot sellers which are programmed by humans.
- I think much of that isn't really relevant to the article, but I'm adding a sentence about par as slang for a price of $100/share. --Benna 05:17, 28 July 2007 (UTC)
[edit] Bonds
It would be great if this article (or perhaps the article on Bonds themselves and/or their secondary markets) could answer this naive question that has long puzzled me:
I can understand why a buyer would pay a less-than-par discount price for a treasury bond, but current bond market futures prices are above par. Today (August 7, 2006), for example, the September futures contract for 30-yr U.S. treasury bonds closed at 109:03. If the face values of the bonds are just 100:00, then why are market prices higher? I'm clearly not understanding something very basic about how these markets work. —The preceding unsigned comment was added by 209.128.98.90 (talk • contribs) 7 August 2006.
- Suppose a 30 year treasury bond is issued at a time when the market risk-free interest rate on a 30 year bond is 5.00%. If later the market rate falls to 4.50%, someone paying par value would still be earning 5.00% on their investment. The price therefore rises until the interest received equates to 4.50%. Similarly, if the market interest rate were to rise, the price of the bond would fall. --Benna 05:33, 28 July 2007 (UTC)
The 30-year bond futures price is based on a notional bond with a coupon of 6.00%. See http://www.cbot.com/cbot/pub/cont_detail/0,3206,1391+702,00.html. Such a bond will trade at a higher price (but more or less the same yield) as bond with similar term, but a lower coupon. jiHymas@himivest.com 216.191.217.82 (talk) 01:20, 2 April 2008 (UTC)
[edit] Excessive US focus
What else can I say? - Jmabel | Talk 05:57, 23 November 2006 (UTC)
Penny stock par value at $25/share? That's wrong. —The preceding unsigned comment was added by 71.202.54.18 (talk • contribs) 13 December 2006.
[edit] Preferred Stock
Preferred stock par value remains relevant, and tends to reflect issue price. Dividends on preferred stocks are calculated as a percentage of par value.
Overly general, at best. See discussion at http://en.wikipedia.org/wiki/Talk:Preferred_stock#Par_value . jiHymas@himivest.com 216.191.217.82 (talk) 01:22, 2 April 2008 (UTC)
