In the USA, capital surplus refers to the difference between the par value of a share and its issue price. It is the equivalent of a share premium in the UK.
The issue price, also known as the offering price, is the price at which a new issue of shares is sold to the public. The market price of the securities may vary post-issuance, trading at a premium or a discount to the issue price.
In accounting and finance, the term 'premium' can refer to the consideration payable for a contract of insurance, an amount in excess of the nominal value of a share, or an amount in excess of the issue price of a share or other security. Premiums play a significant role in insurance policies and in the valuation of shares and securities.
Shares issued at a price below their par value. The discount is the difference between the par value and the issue price. It is illegal to issue shares at a discount in the UK.
A share issued at a price above its par value is referred to as being issued at a premium. The premium is the difference between the issue price and the par value of the share.
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