If the par value of a stock is $5 and the offering price of the stock is $2,the capital in excess of par is:

Question

Quizplus · Accepted Answer

The capital in excess of par is calculated as the offering price minus the par value. In this case, it's $2 (offering price) - $5 (par value) = -$3. However, since capital in excess of par cannot be negative, this scenario is incorrectly described. Typically, the offering price is above the par value. The correct interpretation of excess capital involves scenarios where the offering price is higher than the par value, not lower. Thus, no option accurately reflects a typical situation of capital in excess of par based on the given numbers.

If the Par Value of a Stock Is $5 and the Offering