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face value

The value printed or written on the face, as of a bill or bond.
Apparent significance or value: took their compliments at face value.

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The nominal value or dollar value of a security stated by the issuer. For stocks, it is the original cost of the stock shown on the certificate. For bonds, it is the amount paid to the holder at maturity (generally $1,000). Also known as "par value" or simply "par".

Investopedia Says:
In bond investing, face value, or par value, is commonly referred to the amount paid to a bondholder at the maturity date, given the issuer doesn't default. However, bonds sold on the secondary market fluctuate with interest rates. For example, if interest rates are higher than the bond's coupon rate, then the bond is sold at a discount (below par). Conversely, if interest rates are lower than the bond's coupon rate, then the bond is sold at a premium (above par).

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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.

This entry contains information applicable to United States law only.

A readily ascertainable amount of money determinable from the words of a written instrument alone without the aid of any other source.

The face value of an instrument such as a financial document is only the amount shown on it, without the inclusion of interest or fees customarily added or reference to its actual market value.

A Romanian stamp from 1947 showing a face value of 12 Lei.

The Face value is the value of a coin, stamp or paper money, as printed on the coin, stamp or bill itself by the minting authority. While the face value usually refers to the true value of the coin, stamp or bill in question (as with circulation coins) it can sometimes be largely symbolic, as is often the case with bullion coins. For example, a one troy ounce (31 g) American Gold Eagle bullion coin was worth and sold for about $1200 USD during 2009 market prices (as of November 14, 2009) and yet has a face value of only $50 USD.

Overview

The face value of bonds usually represents the principal or redemption value. Interest payments are expressed as a percentage of face value. Before maturity, the actual value of a bond may be greater or less than face value, depending on the interest rate payable and the perceived risk of default. As bonds approach maturity, actual value approaches face value.

In the case of stock certificates, face value is the par value of the stock. In the case of common stock, par value is largely symbolic. In the case of preferred stock, dividends may be expressed as a percentage of par value.

The face value of a life insurance policy is the death benefit. In the case of so-called "double indemnity" life insurance policies, the beneficiary receives double the face value in case of accidental death.

The face value of property, casualty or health insurance policies is the maximum amount payable, as stated on the policy's face or declarations page.

Face value can be used to refer to the apparent value of something other than a financial instrument, such as a concept or plan. In this context, "face value" refers to the apparent merits of the idea, before the concept or plan has been tested.

Face value also refers to the price printed on a ticket to a sporting event, concert, or other event (the price the ticket was originally sold for by the organization hosting the event). In many jurisdictions, re-selling tickets for more than face value (or a certain amount above face value) constitutes ticket scalping and is illegal.

Taking someone at face value is assuming another person's suggestion, offer, or proposal is sincere, rather than a bargaining ploy.

References

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face value

Overview

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References