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Denomination

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The word denomination has three distinct but closely related uses in a financial context. First, in a given currency, the denomination of legal tender specifies the face value of a give coin or note. In the US, there are four different common coins: the penny ($0.01), nickel ($0.05), dime ($0.10), and quarter ($0.25), and each is one denomination. Similarly, the $1, $5, $10, $20, $50, and $100 notes are each another denomination. The second meaning of denomination applies to most securities. For example, a bond's denomination is its par value, such as $1000. A third use of the word denomination is currency denomination, for description of situations when the type of currency itself is under consideration. For instance, a company must decide to price goods for export in the denomination of one country or another.



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