Investor Glossary - Face ValueInsightful stock market charts - Click here

 # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z     
Is the stock market headed lower? The answer may surprise you.
Find out now with the exclusive & highly regarded charts of Chart of the Day.

Face Value

Face value is the nominal, or stated, amount of security. The face value of a bond is the amount the issuer agrees to pay upon maturity. Face value is also the amount upon which interest payments are determined. For example, a bond with a face value of $1,000 and an interest rate of 6% will pay $60 in interest a year (or, more typically, $30 semi-annually). Importantly, face value is not usually the actual value (i.e. price) of a bond. For example, assume a 30-year bond with a face value of $1,000 and an interest rate of 6%; the interest rate for bonds of similar safety and maturity is currently 10%. In that case, the actual value of the 6% bond would be below the face value, because investors could invest their money in 10% bonds with a face value of $1,000 and earn $100 a year instead of $60. Conversely, if interest rates fell to 2%, the actual value of the 6% bonds would be above face value, because investors would need to buy 2% bonds with a face value of $3,000 to earn the same $60.


               


 Popular Terms : 401a, FICO score, 1031 exchange, option premium, reverse mortgage, balance sheet, quant, stock, deferred revenue, CUSIP, forward PE, asset/equity ratio, Black Friday, minority interest, retained earnings, trailing PE, 10-K, average price per share, annualize, deferred tax




 Rate the face value definition... Receive our free Term of the Day email.
 Your Rating:
 Poor 1 2 3 4 5  Excellent
Simply type in your email address and click submit:
 Comment:   
 


Subscribe   Unsubscribe
Home | Term of the Day | Tell a Friend | Suggest a Term | Edit Subscriber Detail
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2008 Investor Glossary - All rights reserved