Face value: Difference between revisions
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imported>Doug Williamson (Classify page.) |
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Face value or nominal value means the principal amount evidenced by a security certificate. | Face value or nominal value means the principal amount evidenced by a security certificate. | ||
The current market price of a discount instrument before its maturity is always less than the face value. | |||
For an interest bearing instrument, the face value is the amount on which interest is calculated. | For an interest bearing instrument, the face value is the amount on which interest is calculated. | ||
So the amount repayable at maturity is given by the face value plus accrued interest. | So the amount repayable at maturity is given by the face value plus accrued interest. | ||
The current market price of an interest-bearing instrument before its maturity may be less than, more than, or the same as the face value; depending on current market yields. | The current market price of an interest-bearing instrument before its maturity may be less than, more than, or the same as the face value; depending on current market yields. | ||
== See also == | == See also == | ||
* [[Fair value]] | |||
* [[Market value]] | * [[Market value]] | ||
* [[Par]] | * [[Par]] | ||
* [[Shallow discount bond]] | * [[Shallow discount bond]] | ||
[[Category:The_business_context]] | |||
[[Category:Financial_products_and_markets]] | |||
Latest revision as of 21:30, 24 June 2022
Face value or nominal value means the principal amount evidenced by a security certificate.
The current market price of a discount instrument before its maturity is always less than the face value.
For an interest bearing instrument, the face value is the amount on which interest is calculated.
So the amount repayable at maturity is given by the face value plus accrued interest.
The current market price of an interest-bearing instrument before its maturity may be less than, more than, or the same as the face value; depending on current market yields.
