Par value

Par value has several meanings depending on the context, whether used in the equities market, or in the bond markets, and partially also dependent on where in the world the par value term is used.

Equities

In classic 1920's terminology, especially prior to the Crash of 1929, par value was used as slang for when the price of any stock was selling at $100 per share, or for any even multiple of $100/share, such as $200/share, $300/share, etc. As noted by famed stock and commodity speculator Jesse Livermore, most speculative stocks typically rise an unusually large amount shortly after passing through par values, rising in price slowly from $95/share to $96/share to ... to $100/share, at which point human psychology typically pushes the price much higher in a very short time frame after passing par value. This phenomenon also recurrs for every increase of an even $100 in stock price, solely due to human psychology, which ultimately tends to dominate the market over even robot sellers which are programmed by humans.

Credit Markets

In the US credit markets, par value is when the price per hundred dollars is equal to the face value. A US Treasury Note is denominated in units of $1,000, but has its price quoted by common convention in terms of moving the decimal point to the left by one position. A US Treasury Note selling at par value would thus be quoted as 100:00, where the two digits to the right of the colon are priced in thirty-seconds of a dollar (i.e., 3.125 cents.) A par value price of 100:00 would thus equate to a price of a Note or Bond selling at face value of $1000 per US Treasury Note. A price of 75:31, on the other hand, would thus equate to a Note or Bond quoted at a price of (75 + 31/32) x 10, or $759.6875, selling at an obvious discount from its par value of 100:00 for a face value paid upon maturity of the Note or Bond of $1,000.

The practice of pricing in price per hundreds largely grew out of the practice of pricing English Notes, which were (and still are today) denominated in units of 100 Pounds Sterling. These Notes, traditionally sold in physical form having gilt-edges and which are today known as Gilts, are priced in similar form as US debt instruments, but are priced relative to their face value of 100 pounds Stirling. There is no subsequent shift of the decimal point applied in the pricing of such debt instruments as in the US. In the UK credit markets, par value is when the price per 100 Pounds Sterling Note or Bond is equal to the face value.

A par value of 100:00 for a Note or Bond means only that the Note or Bond is selling for the face value paid upon maturity of the Note or Bond. It can (and does) have different absolute values per Note or Bond depending on the conventions of the particular market and country in which such a par value is quoted.