nominal amount of a debt obligation (e.g., note, bond, mortgage) or equity security as stated in the instrument. It excludes interest and dividends. The face value of an instrument is often different from its issuance price; for example, a bond may be issued at a bond discount or bond premium. Also, after issuance the going market price of an instrument will typically differ from its face value. At maturity, the debt instrument will be redeemed at its face amount. The nominal amount of a share of stock represents its par value or stated value.
principal of a security, insurance policy, or unit of currency. In securities, the face value (or the par value) and market value are usually different until maturity. That price difference is the premium or discount.
value indicated in the wording of an instrument. For example, the face value of a bank check is the amount the check is written for. The interest rate of a bond refers to the face value, not the market value. Face value is also called par value or nominal value.
value of a bond, note, mortgage, or other security as given on the certificate or instrument. Corporate bonds are usually issued with $1,000 face values, municipal bonds with $5,000 face values, and federal government bonds with $10,000 face values. Although the bonds fluctuate in price from the time they are issued until redemption, they are redeemed at maturity at their face value, unless the issuer defaults. If the bonds are retired before maturity, bondholders normally receive a slight premium over face value. The face value is the amount on which interest payments are calculated. Thus, a 10% bond with a face value of $1,000 pays bondholders $100 per year. Face value is also referred to as par value or nominal value.
the dollar amount, shown by words and/or numbers, on a document. Compare with market value; see amortization.
Example: A mortgagehas a face value of $100,000, an amortization term of 30 years, and a face interest rate of 6%. It will be amortized in 12 years to $79,079 of remaining balance.
