The face value of a share is also the par value of a share. In fact, it is the legal value of the share. Since it is the legal value of a stock, the company must not pay it in form of dividends to the shareholders. Furthermore, the company fixes the face value of the stock at the time of its issuance. Thus, the investors in the stock market must understand the face value of a stock.
The face value of a share plays a significant role in a company. It is useful for calculations in relation to bonds and preferred stock. Furthermore, the calculation of interest on bonds or preference shares is on the basis of the face value of a stock. Moreover, calculations like discounts, premium, market values, yields, etc. are also on the basis of face value of a share.
Difference between Market Value and Face Value
The investor in the stock market must know that the face value and market value of share are different from each other. In fact, the market value is one that changes with the market conditions. On the other hand, the face value of a share is fixed. The face value of the share is the par value and remain the same as it is specified in the books of the company and share certificate