Information > Financial Terms > This page

Face Value
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)

The principal or nominal VALUE appearing on a bond, note, coupon, piece of money, or other instrument, PAR VALUE.  The face value of a bond is the amount at which the issuing organization contracts to repay it at maturity and is the basis upon which the cash interest rate is computed.  While it is ordinarily the plan of an issuing organization to float bonds at a rate of interest attractive enough to justify their sale at approximately par, or at a slight discount, when placed on the market they fluctuate in accordance with money rates and in accordance with general business conditions and earnings.  Whether a bond commands a premium or sells at a discount, the nearer it approaches maturity, the nearer the market value approximates its par value, until at the date of maturity, the two values should precisely coincide.  Face value is not be confused with market value, book value, intrinsic value, investment value, or trading value.

Back to Information