Face-Amount Certificate Company

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DEFINITION of 'Face-Amount Certificate Company'

A type of investment firm that issues debt securities to its investors. These securities are called face-amount certificates and are backed by security interest on assets such as real property or other securities. This is similar in nature to mortgage bond debt financing.

INVESTOPEDIA EXPLAINS 'Face-Amount Certificate Company'

This technique allows a company to obtain financing at relatively low interest rates, since its debt is backed by specific tangible assets under the company's control. Investors who hold face-amount certificates are usually paid a fixed amount of annual interest and are refunded the principal (or face amount) of their securities at a specified termination date.

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