Glossary

The face value, also known as par value or nominal value, is the original value assigned to a security, such as a bond or a stock, by the issuer.

It represents the amount to be repaid to the bondholder at maturity for bonds and the value used to calculate dividend payments for stocks. The face value typically does not change over time, regardless of market fluctuations. 💰

For example, if a bond has a face value of $1,000, the bondholder will receive $1,000 at the bond's maturity. Similarly, if a stock has a face value of $10, the dividend calculations will be based on that value.

Fun fact: US coins also have a face value, which is the value imprinted on the coin (eg. 1 cent, 5 cents, 10 cents, etc.). However, the face value of a coin might not always reflect its actual worth, as the metal content or collector's interest could make the coin more valuable than its face value. 🪙