face value

Definition

The nominal dollar amount assigned to a security by the issuer. For an equity security, face value is usually a very small amount that bears no relationship to its market price, except for preferred stock, in which case face value is used to calculate dividend payments. For a debt security, face value is the amount repaid to the investor when the bond matures (usually, corporate bonds have a face value of $1000, municipal bonds $5000, and federal bonds $10,000). In the secondary market, a bond's price fluctuates with interest rates. If interest rates are higher than the coupon rate on a bond, the bond will be sold below face value (at a "discount"). If interest rates have fallen, the price will be sold above face value. here also called par or par value.

Use face value in a sentence

Despite the high market price, I got the shares at the lower, face value price since the issuer really wanted to sell his shares.

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principal amount pure discount instrument