Face value is equal to the dollar amount the issuer pays to the investor at maturity. As the bond's price fluctuates, the price is described relative to the original par value, or face value; the bond is referred to as trading above par value or below par value.
Does face value affect bond prices?
It is important to note that when it comes to stocks, face value (or par value) generally has no relation to market price. Bond prices, however, are heavily influenced by their face value. Bonds are usually quoted as a percentage of face value.
What is face value?
Face value, also referred to as par value or nominal value, is the value shown on the face of a security certificate, including currency. The concept most commonly applies to stocks and bonds, so it is particularly important to bond and preferred stock investors.
