Investor Glossary-face valueInvestor Glossary-face valueInvestor Glossary-face valueInvestor Glossary-face valueInsightful stock market charts - Click here
investor
Categories    # 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

Face Value

The HTML to link to this page
 

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.



Rate this face value definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: average price per share, annual return, irrevocable trust, ex-dividend, inflation, open position, Zero Cost Collar, stock split, quality assurance, Key Rate Duration, deferred revenue, APR, reverse mortgage, minority interest, phantom income, debt service coverage, option premium, real GDP, LIBOR, balance sheet, 1035 exchange, diluted share, ex-dividend date, 144a, command economy, class C shares, cancelled check, in escrow, VIX, covered put, per diem, labor relations, required rate of return, FTSE, wholly-owned subsidiary, FICO score, limit order, implied volatility, dividends payable, liquidity ratio, retained earnings, EBITDA, deferred tax, stock market close, margin rate, current ratio, 401a, risk management, 1031 exchange


Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # 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 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
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use