Face Value

Face value or the par value is the nominal value or the dollar value of the security that is defined by the issuer of the security. In terms of the stock the face value is the original value of the stocks that is displayed on the certificate. In case of bonds the face value is termed as the total amount that is paid to the bond holder at the time of maturity of the bond. In general this amount is $1000 per bond at the time of maturity. As explained above the other name of the face value is the par value or simply par.

As explain above in the case of bond the face value or the par value is the amount that issuer has to pay to the bond holder at the time of maturity of the bond if an only if the bond holder does not default. However this is not true for all the bonds as the bonds that are traded in the secondary market often has a fluctuating interest rate so there is no specific bond value or the par value associated with those bonds. For example if the interest rate is higher in association to the bond face value or the coupon rate then the bond will be sold at a lower price the price that is less than the par value of the bond. On the other hand if the interest rate is low than the coupon rate of the bond then the bond will be sold at the high price as compared to the par value of the bond.

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