Full Stock

Full stock is a stock with a par value of $100 per share. A full stock issue can be either a preferred share or common share, although for practical purposes today par value of common stock is set at zero or at a price very close to nil.

Preferred stock whose par value is $100 per share is full stock. Preferred stock shares characteristics with bonds, including the fact they are issued with a face value. The yield on a preferred share is simply calculated as the annual dividend divided by $100. For example, an annual dividend payment of $7.50 per share is equivalent to a 7.5% yield.

Common stock, however, is generally issued with a zero par value or something just nominally above it for accounting purposes. $0.01 par value is typical, as is $0.001, and so on, for companies with shares outstanding. Apple Inc., for instance, set the par value of its common stock at $0.00001 per share. The purpose of negligible common stock par values is to render any potential liability to stockholders meaningless if the stock became worthless. In the early days of public companies, when share prices of full stock fell well below $100 or sank to nothing in a bankruptcy, shareholders who owned full stock made claims against the companies to be made whole at $100.

Par value, if something above zero, is part of a corporation's legal capital; it is known as paid-in capital (or paid-up capital). The portion in excess of this nominal value is the firm's additional paid-in capital. For example, a firm that issues a share of $0.01 par value stock for $30 will credit the Common Stock account (in Shareholder's Equity) a penny. The additional paid-in capital account will be credited $29.99 for that single share issued.