Monday, September 1, 2014

Face Value


Definition of 'Face Value'
The nominal value of a security or share stated by the issuer. For shares it is the original cost of the stock shown on the certificate. For bonds, it is the amount paid to the holder at the end of maturity period. In other words, we can say "par value" or simply "par".

Expertsmind.com explains 'Face Value'
Face value, or par value in bond, is commonly referred to the amount paid to a bondholder at the maturity date, subject to the issuer doesn't default. However, bonds which are sold in the secondary market fluctuate with interest rates. For example, if interest rates are higher, then the bond is sold at a discount (below par). Conversely, if interest rates are lower, then the bond is sold at a premium (above par).

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