Face Value

DEFINITION of 'Face Value'

The nominal value or dollar value of a security stated by the issuer. For stocks, it is the original cost of the stock shown on the certificate. For bonds, it is the amount paid to the holder at maturity (generally $1,000). Also known as "par value" or simply "par."

BREAKING DOWN 'Face Value'

In bond investing, face value, or par value, is commonly referred to the amount paid to a bondholder at the maturity date, given the issuer doesn't default. However, bonds sold on the secondary market fluctuate with interest rates. For example, if interest rates are higher than the bond's coupon rate, then the bond is sold at a discount (below par). Conversely, if interest rates are lower than the bond's coupon rate, then the bond is sold at a premium (above par).

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RELATED FAQS
  1. In the context of a bond, what does the principal refer to?

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  3. What risk factors should investors consider before purchasing a callable bond?

    A number of risk components should be considered in regard to any bond investment since bonds, like any investment, do carry ... Read Full Answer >>
  4. How does an investor make money on a zero coupon bond?

    An investor makes money on a zero-coupon bond by being paid interest upon maturity. Also known as a discount bond, a zero-coupon ... Read Full Answer >>
  5. What are the advantages of using an effective interest rate figure?

    The primary advantage of using the effective interest rate figure is simply that it is a more accurate figure of actual interest ... Read Full Answer >>
  6. What is the difference between yield to maturity and the coupon rate?

    A bond's coupon rate is the actual amount of interest income earned on the bond each year based on its face value. A bond's ... Read Full Answer >>
  7. How does face value differ from the price of a bond?

    Face value, or par value, is equal to a bond's price when it is first issued, but thereafter, the price of the bond fluctuates ... Read Full Answer >>
  8. Why is my bond worth less than face value?

    There are two primary reasons a bond might be worth less than its listed face value. A savings bond, for example, is sold ... Read Full Answer >>
  9. How long will it take for a savings bond to reach its face value?

    As government-issued investment instruments, U.S. savings bonds are one of the most risk-free investments available anywhere. ... Read Full Answer >>
  10. How are treasury bill interest rates determined?

    Usually, U.S. Treasury bills (T-bills) are sold at a discount from their par value. The level of discount is determined during ... Read Full Answer >>
  11. What is face value and how is it determined?

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  12. Can a church issue a bond?

    The North American Securities Administrators Association (NASAA) has acknowledged that "church bonds" are allowed to be issued ... Read Full Answer >>
  13. What is the difference between a zero-coupon bond and a regular bond?

    The difference between a zero-coupon bond and a regular bond is that a zero-coupon bond does not pay coupons, or interest ... Read Full Answer >>
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