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Face value is the amount of money promised to the bondholder upon the bond’s maturity. By contrast, a bond’s market value is how much someone will pay for the bond on the free market. Face value is predetermined when the bond is sold; market value takes into account multiple outside factors. These include the current interest rate ...
- What Is Face Value?
- Understanding Face Value
- Face Value vs. Market Value
- The Bottom Line
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the holder at maturity, typically in $1,000 denominations. The face value of bonds is often referred to as...
In bond investing, face value (par value) is the amount paid to a bondholder at the maturity date, as long as the bond 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, i...
The face value of a stock or bond does not denote the actual market value. Market value is determined based on principles of supply and demand. In turn, supply and demand is governed by the dollar figure where investors are willing to buy and sell the security, at a given time. In fact, depending on market conditions, the face value and market valu...
In finance, face value refers to the nominal or dollar value of a security stated by the issuer. This is also known as "par value" or "par," typically in reference to bonds. Face value is not the same as market value which is the current value of the security, based on supply and demand. With bonds, face value refers to the amount paid to the holde...
Aug 25, 2023 · To sell the bond in the secondary market, the price of the bond will have to fall about 1% (extra 0.5% per year x 2 years), so it will be trading at a discount to face value. New bonds issued from ...
- J.B. Maverick
Jul 12, 2023 · The entity that issues a financial instrument like a bond or stock assigns a par value to it. Par value refers to the "face value" of a security, and the terms are interchangeable. Par value and ...
- Claire Boyte-White
Sep 30, 2019 · A bond’s coupon rate is the rate at which it earns these returns, and payments are based on the face value. So if a bond holds a $1,000 face value with a 5% coupon rate, then that would leave ...
In general, face value is a term used to describe the dollar value of any security as provided by the issuer. In the case of stocks, face value is the same as the original stock cost as described on the certificate, but for bonds, face value is an amount paid to the bond investor when the bond matures. The amount is usually $1,000.
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Sep 29, 2020 · Face value is an often arbitrarily assigned amount used to calculate the accounting value of a company's stock for balance sheet purposes. When it comes to bonds and preferred stock, however, face value represents the amount that must be repaid at maturity. Corporate bonds usually carry a $1,000 face value, municipal bonds usually carry a ...
