# face value

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Related to face value: book value

## Face Value

The amount of money stated on a bond or (rarely) a stock certificate. For example, if a bond certificate says \$1,000, the face value is \$1000. Bonds pay the face value at maturity, and calculate coupons as a percentage of the face value. Many bonds are issued at their face value, though discount bonds are not. The face value is also called the par value or simply par.

See par value.

## Face value.

Face value, or par value, is the dollar value of a bond or note, generally \$1,000.

That is the amount the issuer has borrowed, usually the amount you pay to buy the bond at the time it is issued, and the amount you are repaid at maturity, provided the issuer doesn't default.

However, bonds may trade at a discount, which is less than face value, or at a premium, which is more than face value, in the secondary market. That's the bond's market value, and it changes regularly, based on supply and demand.

The death benefit of a life insurance policy which is the amount the beneficiary receives when the insured person dies. It's also known as the policy's face value.

see PAR VALUE 1.

## face value

The value of an instrument (promissory note, bond, stock, etc.) as stated on the face of the instrument.The face value does not always equal the market value.

Example: A 5-year-old mortgage note with a face value of \$100,000 and an amortization term of 20 years at 2.8 percent interest is worth far less than \$100,000 for two reasons: (1) The principal balance is now a little under \$80,000. (2) Why would anyone invest even \$80,000 to earn 2.8 percent interest when he or she can get better returns in the marketplace? For both reasons, an investor would pay much less than the \$100,000 face value to buy the mortgage.

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