Talk:Par value/Archives/2011

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)

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)

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)

issuer company

"Par value is a nominal value of a security which is determined by an issuer company at a minimum price."

I don't think this line is a good first line under 'stock'; it seems to ring of conclusiveness rather than of introduction. 'A minimum price' and 'nominal value' are ambiguious and contextless until you read further on. Can we move it to the end of it's paragraph and bold it too (as that it concludes the basic idea concisely)?

US Treasury bonds

Removed the following:

The quoting of prices for Treasury notes is a peculiar thing. A Treasury note is denominated in units of $1,000, but has its price quoted by common convention in terms of moving the decimal point to the left by one position. A Treasury note selling at par value would thus be quoted as 100:00, where the two digits to the right of the colon are priced in thirty-seconds (1/32) of a dollar (0.03125 dollars.) A par value price of 100:00 would thus equate to a price of a note or bond selling at face value of $1000 per Treasury note. A price of 75:31, on the other hand, would thus equate to a note or bond quoted at a price of (75 + 31/32) x 10, or $759.6875, selling at an obvious discount from its par value of 100:00 for a face value paid upon maturity of the note or bond of $1,000. Only the market for Treasury securities still prices using thirty-seconds of a dollar; all other markets use decimal notation.

It's obviously incorrect: "(75 + 31/32) x 10" suggests that the right-hand amount is $10/32, not $1/32. United States Treasury security#Treasury note (permalink) suggests that the 12:34 notation refers to (percentage) points (i.e. 100:00 is always par). TreasuryDirect.gov says that the minimum purchase is $100, so it can't be denominated in $1000 either. ⇌Elektron 18:37, 14 September 2009 (UTC)

coins face value and precious metals

I don't get it. How can a coin that has one ounce of 99.9% silver can also have a "nominal face value of one dollar"? The silver content it self is worth about 16 times more. some of these coins are new, that is to say - at the moment of minting they were worth 16 times "one dollar". I dont get it :) --Namaste@^? 14:08, 20 February 2010 (UTC)

"Sometimes non-monetized bullion coins such as the Canadian Maple Leaf and the American Gold Eagle are minted with nominal face values less than the value of the metal in them, but as such coins are never intended for circulation, these value numbers are not market nor fiat values, and are never more than symbolic numbers." -from wikipedia. Personally, I find this stupid and very misleading.(if not redundant) this article should address this issue.--Namaste@^? 14:24, 20 February 2010 (UTC)

Removal of text on pricing notation conventions

I removed the following (quoted below). Rationale: It's slightly off-topic and does not fit in with the rest of the text. Is it a left-over after previous edits? Also, some of it is difficult to comprehend.

The practice of pricing in price per hundreds largely grew out of the practice of pricing British government bonds, which were (and still are today) denominated in units of 100 pounds Sterling. These notes, originally sold in physical form having gilt-edges and therefore known as "Gilts", are priced in similar form as US debt instruments, but are priced relative to their face value of 100 pounds Sterling. There is no subsequent shift of the decimal point applied in the pricing of such debt instruments as in the US. In the United Kingdom bond markets, par value is when the price per 100 Pounds Sterling note or bond is equal to the face value.

A par value of 100.00 for a note or bond means only that the note or bond is selling for the face value paid upon maturity of the note or bond. It can (and does) have different absolute values per Note or Bond depending on the conventions of the particular market and country in which such par value is quoted.

--HugeHedon (talk) 22:01, 9 April 2010 (UTC)