Bonds & rates
Face value
Also called Par value, Principal or Nominal value
The amount a bond repays at maturity, and the amount its coupon is calculated on.
How it works
Face value is fixed at issue and does not change with the market price. A bond trading at 95 will still repay 100 at maturity.
The gap between the market price and face value is where much of a bond’s return comes from when it is bought away from par.
Related terms
- BondA loan you make to a government or company, which pays you interest and returns your money on a set date.
- CouponThe fixed interest a bond pays each year, expressed as a percentage of its face value.
- Yield to maturityThe total annual return from holding a bond to maturity, counting coupons and any price gain or loss.
- Discount and premiumA bond trading below face value is at a discount; above face value, at a premium.
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Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.