Corporations Bar Practice Exam

"No par" stock refers to shares that do not have a specific nominal or par value assigned to them in the corporate charter. This means that there is no minimum price at which the stock can be issued when the corporation sells it.

While traditional stock typically has a par value that represents the minimum amount the shareholders must pay for the shares, with no par stock, the company has the flexibility to issue the shares at any price it deems appropriate, even below what would be considered a nominal minimum. This provides corporations more leeway in structuring their capital and can be particularly beneficial in attracting investors.

In contrast, the other choices suggest limitations on the stock's value or sellability, which are incorrect. No par stock can still be sold and can have significant market value, depending on the company's performance and investor perception. Moreover, stating that the stock is worthless is misleading; no par simply refers to the absence of a minimum price.