The price printed on the face of a stock certificate represents the:

Prepare for the Canon Financial Institute CFIRS Exam with flashcards and multiple choice questions. Each question comes with hints and explanations for better understanding. Get ready to excel in your exam!

The price printed on the face of a stock certificate represents the par value of the stock. Par value is a nominal value assigned to a share of stock that typically reflects the minimum price at which shares can be issued, as set by the company. This value does not necessarily represent the actual market price at which the stock trades or its intrinsic value based on company performance or assets.

Par value is often set at a very low amount, such as $0.01 or $1.00 per share, and is primarily a legal requirement rather than a reflection of the stock's value in the market. Investors may pay much more than the par value when buying shares in the open market, where the market value is determined by supply and demand among buyers and sellers. Therefore, understanding par value is crucial as it distinguishes it from book value, which refers to the company's equity as recorded in its financial statements, and market value, which reflects the current trading price of the stock.

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