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The par value of a common stock represents
A. the total value of the stock that must be entered in the issuing corporation's records.
B. the liability ceiling of a shareholder when a company undergoes bankruptcy proceedings.
C. the estimated market value of the stock when it was issued.
D. none of these answers.
E. the amount that must be recorded on the issuing corporation's record as paid-in capital.
Answer: B
Par value represents a stock's legal capital. It is an arbitrary value assigned to stock before it is issued. Par value represents a shareholder's liability ceiling because, as long as the par value has been paid in to the corporation, the shareholder obtains the benefits.


A. Option A
B. Option D
C. Option C
D. Option B
Answer: C,D

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