What is Face Value?
Face value is a term used in finance and economics to refer to the intrinsic value of an asset or liability. It is the amount printed on a security, such as a stock, bond, or banknote—the amount that must be paid on the due date. Face value is also referred to as par value or nominal value.
How Face Value Works
Face value is the amount printed on a security, such as a stock, bond, or banknote. This value is also known as par value or nominal value and is usually the amount that must be paid on the due date. Face value is important because it is the basis for calculating interest payments on a security. It is also used to calculate the market value of a security. For example, if the face value of a bond is $1,000 and the interest rate is 5%, the value of the bond is $1,050 (1,000 * 5%) at the end of the year.
Examples of Face Value
Face value can apply to many different securities, including stocks, bonds, and banknotes.
- Stocks: The face value of a stock is the amount printed on the stock certificate. This amount is usually the par value of the stock.
- Bonds: The face value of a bond is the amount that must be repaid at maturity. This is also known as the par value or nominal value of the bond.
- Banknotes: The face value of a banknote is the amount printed on the note. This amount is usually the par value or nominal value of the note.
Conclusion
Face value is an important concept in finance and economics. It is the basis for calculating interest payments on a security and is used to calculate the market value of a security. Face value applies to many different securities, including stocks, bonds, and banknotes.References: