Common stock has par value, and market value. Explain briefly these values. Which one is most important and why?

Par Value is the value of shares specified at incorporation. Market value is the value that one could receive for the good at the value of current market conditions.

Par Value:

• Par value is also called face value. The entity that issues a financial instrument assigns a par value to it. It is the printed value when shares of stocks and bonds were printed on paper, their par values were printed on the faces of the shares.
• When a company or government issues a bond, its par value represents the amount of money the bond will be worth at its maturity date.
• For example, if a bond with a par value of $100 is purchased with a maturity date one year in the future, the bondholder is entitled to collect $100 from the issuing company at the end of that year in addition to whatever interest payments the bond yielded.
• A stock can be purchased for more or less than its par value and bond can be purchased for more or less, depending on prevailing market sentiment about the security. But when it reaches its maturity date, the bondholder is paid the par value regardless of if the purchase price.
• It is also called as dollar value, to each class of stock it issues. The company uses par value to record the shares issued in the financial records. The actual price received for the stock usually includes an amount greater than par value. Par value never changes.

Market Value:

• The market value is primarily determined by supply and demand, or to be more precise, the investor’s confidence and assessment of its potential value in the future.
• The market value is the price that you actually pay to acquire an asset like properties, cars, etc. or the most current price for a market-traded security like bonds, stocks, etc. Depending on factors such as the supply and demand and investors’ confidence, the market value might be higher or lower than the par value.
• Buyers and sellers determine the market value of each share of stock through the prices they're willing to sell for or to pay for each share.
• When the demand for a particular stock is greater than the supply of shares available, the price will shoot up. Buyers choose to pay more to receive a share of stock. If the demand for that stock is less than the supply of shares, the price will decreases.
• The stock market will determine the real value of a stock, and it continually shifts as shares are bought and sold throughout the trading day.

For stocks, it's the market value that matters.

The stock market value will determine the real value of a stock that is, and it continually shifts as shares are bought and sold throughout the trading day.

When you purchase an asset or security, one of the most important factors is its market value, or to be more precise, the disparity between the market value and the potential and perceive worth of an asset in the future. Simply put, investors always expect to acquire a future performer at a discount.

Market value is the company's worth based on the total value of its outstanding shares in the market, which is its market capitalization. Market value tends to be greater than a company's book value since market value captures profitability, intangibles, and future growth prospects.

One of the main reasons why market value is important is because if provides method that eliminates uncertainty for determining what an asset is worth. The primary goal of determining market value is to provide a fair assessment of the worth or value of the asset.