1. Money

Face Value

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Definition:

In bonds, face value refers to what is owed to a bondholder when the security matures. By tradition, most bonds in the U.S. have a face value of $1,000.

A 20-year bond with a face value of $1,000 and a 10% interest rate will pay the holder $100 a year for 20 years. At the end of the 20 years, the bond matures and the bondholder gets back his $1,000 or principal.

Prior to maturity, the price of a bond is determined by shifts in the market. As a result, a bond may sell for less than face value (below-par) or for more than face value (above par.)

Also Known As: par value, principal

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