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Face Value

What is 'Face Value'

Face value is the nominal value or dollar value of a security stated by the issuer. For stocks, it is the original cost of the stock shown on the certificate. For bonds, it is the amount paid to the holder at maturity, generally $1,000. It is also known as "par value" or simply "par."

Explaining 'Face Value'

In bond investing, face value, or par value, is the amount paid to a bondholder at the maturity date, given the issuer does not default. However, bonds sold on the secondary market fluctuate with interest rates. For example, if interest rates are higher than the bond's coupon rate, then the bond is sold at a discount, or below par. Conversely, if interest rates are lower than the bond's coupon rate, then the bond is sold at a premium, or above par. While face value of a bond provides for a guaranteed return, the face value of a stock is often a poor indicator of actual worth.

Face Value and Bonds

The face value, or par, of a bond is the amount the issuer provides to the bond holder once maturity is reached. A bond may have an additional interest rate or the profit may be based solely on the increase from a below-par original issue price and the face value at maturity.

Face Value and Stock Shares

The cumulative face value of all of a company’s stock shares designates the legal capital that must be maintained in the business. Only funds above and beyond that point can be released out to investors as dividends, making the funds covering the face value function as a form of reserve. However, there is no requirement that dictates what must be listed as face value upon issue, allowing businesses to use very low values to determine the size of the reserve. For example, the par value of AT&T shares is listed as $1 per common share, while Apple shares have a par value of $0.00001.

Face Value and Market Value

The face value of a stock or bond does not denote the actual market value. Market value is determined based on principles of supply and demand, often governed by what investors are willing to buy and sell a particular security for at a specific point in time. Depending on market conditions, the face value and market value may have very little correlation.


Further Reading


Financial intermediation as delegated monitoring: A simple example
papers.ssrn.com [PDF]
… $2 or $3 million in bonus, to positions with an underlying face value of over $1 … clarify the problem but only invented ways of making contradictions between economics and morals … Moral thought on economic questions must be connected closely to new financial instruments and …

The elasticity of financial assetsThe elasticity of financial assets
www.jstor.org [PDF]
… $2 or $3 million in bonus, to positions with an underlying face value of over $1 … clarify the problem but only invented ways of making contradictions between economics and morals … Moral thought on economic questions must be connected closely to new financial instruments and …

Managerial discretion and optimal financing policiesManagerial discretion and optimal financing policies
www.sciencedirect.com [PDF]
… $2 or $3 million in bonus, to positions with an underlying face value of over $1 … clarify the problem but only invented ways of making contradictions between economics and morals … Moral thought on economic questions must be connected closely to new financial instruments and …

Method of playing a game of economics and financeMethod of playing a game of economics and finance
patents.google.com [PDF]
… $2 or $3 million in bonus, to positions with an underlying face value of over $1 … clarify the problem but only invented ways of making contradictions between economics and morals … Moral thought on economic questions must be connected closely to new financial instruments and …

On the resolution of agency problems by complex financial instruments: A replyOn the resolution of agency problems by complex financial instruments: A reply
www.jstor.org [PDF]
… $2 or $3 million in bonus, to positions with an underlying face value of over $1 … clarify the problem but only invented ways of making contradictions between economics and morals … Moral thought on economic questions must be connected closely to new financial instruments and …

Securitisation and financial stabilitySecuritisation and financial stability
academic.oup.com [PDF]
… $2 or $3 million in bonus, to positions with an underlying face value of over $1 … clarify the problem but only invented ways of making contradictions between economics and morals … Moral thought on economic questions must be connected closely to new financial instruments and …

The determination of financial structure: the incentive-signalling approachThe determination of financial structure: the incentive-signalling approach
www.jstor.org [PDF]
… $2 or $3 million in bonus, to positions with an underlying face value of over $1 … clarify the problem but only invented ways of making contradictions between economics and morals … Moral thought on economic questions must be connected closely to new financial instruments and …

On the resolution of agency problems by complex financial instruments: a commentOn the resolution of agency problems by complex financial instruments: a comment
www.jstor.org [PDF]
… $2 or $3 million in bonus, to positions with an underlying face value of over $1 … clarify the problem but only invented ways of making contradictions between economics and morals … Moral thought on economic questions must be connected closely to new financial instruments and …

Entrepreneurial finance: Banks versus venture capitalEntrepreneurial finance: Banks versus venture capital
www.sciencedirect.com [PDF]
… $2 or $3 million in bonus, to positions with an underlying face value of over $1 … clarify the problem but only invented ways of making contradictions between economics and morals … Moral thought on economic questions must be connected closely to new financial instruments and …



Q&A About Face Value


How much does AT&T have as its face value?

1 per share.

What is the face value of a bond?

The face value of a bond is the amount paid to the holder at maturity.

What does par mean?

Par means original cost of stock shown on certificate.

How much does Apple stock have as its face value?

.1 per share.

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