What is defined as a legal value assigned to each share of stock?

The concept of par value refers to the nominal or face value assigned to a share of stock as specified in the company's charter. This value represents the minimum price per share that can be established during the initial issuance of stocks. It is an accounting measure rather than a reflection of the current market price of the stock, which can fluctuate based on demand and supply dynamics. Par value is often set at a very low amount, such as $0.01, which helps companies avoid potential legal issues related to issuing stocks below this value. Therefore, understanding par value is crucial as it provides a baseline for assessing the company’s equity capital structure and can impact various financial metrics.

The other concepts, while related to stock and equity valuation, do not specifically refer to this legal value assigned to shares. Market value reflects current trading prices, nominal value typically represents a theoretical value without legal standing, and equity value pertains to the total value of all outstanding shares in the market.