Is the face value of a stock, the price at which it gets traded for the first time after getting listed on the Stock Exchange?
My Understanding:
A Company XYZ is formed. And initially, the Entrepreneur asked his friends to invest in the company.
So, the company got divided between him and his friends i.e. an equal partnership in the company.
They, themselves decided that they will have a share price of Rs. 5.
Is this Rs. 5, the Face Value of the Stock?
Or, the price that was decided by the Merchant Banks, that at this price, it should go for an IPO (eg. Rs 15)?
Or, when this Company went to IPO, and after the IPO, whatever Share Price was decided (eg. Rs. 20), that Share Price is the Face Value of the Stock? In essence, the Price at which it got Listed On The Stock Exchange.
In this case Rs. 20.
Please explain.
And What will be the Par Value of the Stock? As I see that it is somewhat different than Face Value of the Stock.
Thanks, And Regards
Tejan Mehndiratta