Definition of above par
: better than normal or expected : very good The performance was above par.
Word by Word Definitions
: in the sky : overhead
: in or to heaven
: in or to a higher place
: in or to a higher place than : over
: upriver of
: superior to (as in rank, quality, or degree)
: something that is above
: a person whose name is written above
: a higher authority
: written or discussed higher on the same page or on a preceding page
: the established value of the monetary unit of one country expressed in terms of the monetary unit of another country using the same metal as the standard of value
: the face amount of an instrument of value (such as a check or note): such as
: the monetary value assigned to each share of stock in the charter of a corporation
: to score par on (a hole)
Financial Definition of ABOVE PAR
How It Works
In the bond world, par is the face value of a bond. That is, the par value is the amount the issuer promises to pay the bondholder when the bond matures. For equities, the par is a very small, arbitrary value assigned to each share.
Let's assume Company XYZ issues $10,000,000 in bonds to the public. It may do so by issuing 10,000 bonds, each with a $1,000 face value. That means that when each bond matures, the holder will receive the par value of $1,000. Most corporate bonds have $1,000 face values, but municipal bonds often have $5,000 par values and federal bonds often have $10,000 par values.
The par values for stocks are typically $0.01 per share and are set forth in the issuer's articles of incorporation. For preferred stock, however, par values may be higher because they are often used to calculate dividends.
Why It Matters
For bonds, par is a pricing benchmark. When the bond's price is below par, the bond is considered "discounted"; when the bond's price is above par, the bond is considered "at a premium."
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