The stated value of a financial instrument or security is the value shown on its face, such as the assigned dollar amount for a stock share or the principal of a bond. It is also referred to as par value, face amount, face value, or nominal value. In the past, par value was significant as it indicated the issuance amount for shares, but nowadays it has a minor role and does not indicate the price at which shares are issued, except that the price must be equal to or higher than the par value for common stock shares.
The stated value of an instrument or security is the arbitrary dollar amount assigned to it, also known as par value, face amount, face value, or nominal value. For example, if a company issues 100 shares of common stock with a par value of $10 per share, the stated value of each share is $10. This means that the company has assigned a value of $10 to each share of stock. The stated value is determined by the company that issues the security, and it sets a minimum price for the stock, as the stock price cannot be lower than the par value. However, the actual market value of the stock may be higher or lower than the par value.
Stated value refers to the declared or specified value of a particular item or asset, often used in insurance policies or financial transactions.
Stated value is the value declared by the owner, while market value is the actual worth of the item in the current market.
In most cases, the stated value of an item can be changed if there is a valid reason for doing so, such as a change in the item’s condition or market value.
If the stated value of an item is lower than its actual value and a claim is made, the insurance company may only pay out the stated value, leaving the owner responsible for the remaining amount.
In some cases, the stated value of an item can be higher than its actual value, but this may lead to higher insurance premiums and potential issues in the event of a claim.
Stated value and agreed value are similar concepts, but agreed value is typically used in the context of antique or classic cars, where the owner and insurer agree on a specific value for the vehicle.
In financial transactions, stated value may be used to determine the value of shares of stock or bonds, which can impact the amount of dividends or interest paid to the shareholder.
The stated value of a property is not typically used for tax purposes, as tax assessments are based on the property’s market value.
When determining the stated value of an item, it’s important to consider its current market value, any potential depreciation, and the potential impact on insurance coverage.
The stated value of an item can be contested in a legal dispute if there is evidence to support that the declared value is inaccurate or misleading.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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