Face Value

Financial Dictionary -> Investing -> Face Value

Face value refers to the stamped, etched or imprinted value on a paper note, coin or stamp as created by the printing or minting authority. Although this face value normally refers to a fair representation of the true value of the note, coin or stamp in question, it can sometimes lose its meaning. For example, the face value of bullion coins - American Gold Eagle bullion coin is $50, but the actual worth in 2008 is around $844.

The amount paid to a bondholder at the maturity of the bond (as long as the issuer doesn't default) is also referred to as the face value or par value in the investment bond business; however bonds sold and traded on the aftermarket fluctuate along with interest rates. Interest payments on bonds are a percentage of the face value. On maturity the value of the bond is more or less of the face value.

The face value of common stock is indicated on the stock certificate although this often bares no relationship with its current worth in the market place; however with preferred stock, the face value is used to calculate the amount of dividend payments to make to shareholders.