Face Value

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Description of Face Value. Explanation.

 

Definition Face Value. Description.


Face Value is the value of a debt obligation, such as a bond, mortgage, note or equity security, as stated on the certificate or instrument. It excludes interest and dividends.


Corporate Bonds are usually issued with $1.000 face values, state and city municipal bonds with $5.000 face values, and federal government bonds with $10.000 face values. Although the price of bonds fluctuates from the date they are issued until redemption, they are redeemed at their Maturity Date at their Face Value, unless the issuer defaults. If the bonds are retired before the Maturity Date, bondholders receive a higher price then the Face Value: the Redemption Value.


Interest on a bond is calculated on this value; for example a $1.000, 7% corporate bond, will pay an annual interest of $70.


Also called Nominal Value and Par Value.


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Compare with: Redemption Value  |  Maturity Date  |  Yield to Maturity  |  Net Present Value  |  Bond Insurance

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