What is ‘Half Stock’
Stock sold with a par value half of what is considered standard. Half stock can be either common or preferred and, other than the reduced par value, acts as a regular share of stock. The par value of a typical share of stock is $100, meaning that half stock has a par value of $50.
Explaining ‘Half Stock’
The valuation of a share of common stock is typically the same for both a regular share of stock and half stock, since much of the stock’s value is related to growth potential. Par value is an important factor in determining the dividend of a share of stock, making it more important for preferred stock. Additionally, preferred stock may have a higher claim on the proceeds of a company being liquidated, typically equivalent to its par value. This means that a half stock share of preferred stock would potentially receive less in liquidation.
Further Reading
- Stock returns and expected business conditions: Half a century of direct evidence – www.nber.org [PDF]
- The stock–bond correlation and macroeconomic conditions: One and a half centuries of evidence – www.sciencedirect.com [PDF]
- Financing decisions: who issues stock? – www.sciencedirect.com [PDF]
- Financial literacy and planning: Implications for retirement wellbeing – www.nber.org [PDF]
- Financial literacy and retirement preparedness: Evidence and implications for financial education – link.springer.com [PDF]
- Accounting for taste: Art and the financial markets over three centuries – www.jstor.org [PDF]
- Financial development and economic growth: an egg‐and‐chicken problem? – onlinelibrary.wiley.com [PDF]
- Stock returns and expected business conditions: Half a century of direct evidence – amstat.tandfonline.com [PDF]
- Long-term management of building stocks – www.tandfonline.com [PDF]
