Question

There is a direct relationship between the par value and market value of common stock: stocks with a low par value have a low market value, while stocks with a high par value have a high market value.

a. True
b. False

Answer 1

The statement is false.

Step-by-step explanation:

As the market value of the stock depends upon the industry risk, political, economical, technological, etc factors and also largely depends upon the business performance which is the profits generated by the organization and its cashflow health. So higher par value has nothing to do with higher market value. Hence the statement is totally incorrect.