Face Value (Par)
The nominal value of a bond that the issuer promises to repay at maturity — typically $1,000 for U.S. bonds.
Face value (also called par value or principal) is the amount the issuer will repay the bondholder at maturity. For most U.S. bonds it is $1,000. Coupon rates are expressed as a percentage of this face value.
In secondary markets, bonds trade at prices expressed per $100 of face value. A price of 97.50 means the bond costs $975 per $1,000 face value — trading at a discount. A price above 100 is a premium.
When a bond matures, the holder receives face value — regardless of what the market price was during the life of the bond. This is why buy-and-hold investors care less about short-term price fluctuations.
Related Terms
Accrued Interest
The coupon interest earned on a bond since the last payment date, owed by the buyer to the seller when a bond is purchased between coupon dates.
IntermediateBond
A debt instrument in which the issuer borrows money from the buyer and promises to pay periodic interest plus return the principal at maturity.
BeginnerBond Yield
The return an investor earns by holding a bond — driven by its price, coupon, and time to maturity. Moves inversely with price.
BeginnerCoupon
The fixed annual interest payment made by a bond issuer to the bondholder, expressed as a percentage of face value.
BeginnerCurrent Yield
A bond's annual coupon payment divided by its current market price — a simple but incomplete measure of yield that ignores capital gain or loss.
IntermediateMaturity
The date on which a bond's principal must be fully repaid to the bondholder, ending the life of the debt instrument.
BeginnerZero-Coupon Bond
A bond that pays no periodic coupon, sold at a discount to face value; the entire return is the gap between purchase price and par at maturity.
Intermediate