Effective Par

Effective Par - The effective par is the normal dollar value assigned to a security by its issuer. This is used for capital stocks, which pays a specific dividend... The effective par is when the issuer sets a price, usually its lower then the market price and has very little bearing on the market value of the stock. The only expectation would be for Preferred stock. In the case of Preferred stock, par value is calculated for dividend payments In the case of Debt Security, Effective par is important. It's the price paid back to investors when the bond matures. If interest rates have fallen the bond will be paid above effective par.