What do you call the amount a company receives above par value from selling stock to investors?

Study for UCF's FIN3403 Exam. Access flashcards, multiple choice questions, and explanations. Excel on your exam!

The correct term for the amount a company receives above par value from selling stock to investors is referred to as Paid-In-Capital. This term specifically designates the total amount of cash or other assets that shareholders have invested in the company above the par value of the stock.

In financial contexts, par value is a nominal value assigned to shares of stock, and when shares are sold for more than this amount, the excess is classified as paid-in capital. This reflects the additional premium that investors are willing to pay over the nominal value, indicating their belief in the company's future prospects and current value.

While terms like Common Stock refer to the type of shares that investors purchase, and Capital Surplus or Share Premium may be used in specific contexts, Paid-In-Capital is the standardized term that encompasses the amount received in excess of par value across a variety of equity financing scenarios. Therefore, it accurately captures the concept behind the question asked.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy