What Is Face Value? Meaning for Bonds and Stocks

By Markets & Investing DeskUpdated Nov 10, 2026

Definition

Face value is the nominal amount an issuer assigns to a security. For a bond it is the principal repaid at maturity; for a stock it is a small legal figure unrelated to market price.

Key takeaways

Coupon interest is figured on face value, so a $1,000 bond at 5% pays $50 a year at any purchase price.
Bond quotes are a percentage of face value, so a quote of 98.5 on $10,000 face means a price of $9,850.
A bond trading above face value is at a premium, and one trading below it is at a discount.
Many U.S. companies set stock par values very low because some states base fees or franchise taxes on par value.

Face value is the nominal dollar amount an issuer assigns to a security. For a bond, it is the principal the issuer promises to repay at maturity and the base on which coupon interest is calculated. It is a real cash promise: hold the bond to maturity, and if the issuer does not default you receive the full face value. For a share of stock, it is a legal and accounting figure printed in the corporate charter or on the certificate, usually a tiny amount with no connection to what the share trades for. The market price of either security can sit far above or below it. Face value is also called par value, par or nominal value, and it is often written FV.

How Face Value Works

Face Value of a Bond

When a company or government issues a bond, it borrows the face value and agrees to repay it on a set maturity date. Bonds are commonly issued in $1,000 denominations, so a $1,000 face value is the standard teaching example, although other denominations exist.

Face value drives two cash flows:

Coupon payments. The coupon rate is applied to face value, not to the price you paid. A $1,000 bond with a 5% coupon pays $50 a year whether you bought it for $900 or $1,100.
Repayment at maturity. On the maturity date the issuer pays back the face value. A buyer who paid less than face value gains the difference; a buyer who paid more takes a loss on the principal that the higher coupons may or may not offset.

Some bonds pay no coupon at all. A zero-coupon bond is sold below face value, and the investor’s entire return is the gap between the purchase price and the face value received at maturity.

Bond face value is usually static, with notable exceptions. Inflation-linked bonds, such as U.S. Treasury Inflation-Protected Securities (TIPS), adjust their principal for changes in an inflation index, so the amount repaid and the coupon dollars both change over time. Amortizing debt, such as mortgage-backed securities, returns principal gradually, so the outstanding principal falls below the original face value before maturity. Callable bonds can be redeemed early at a call price written into the bond’s terms, which may be set at or above face value.

For stock, face value is the minimum legal value assigned to each share when the company is formed. In the United States it is generally set very low. AT&T has listed a par value of $1 per common share, while Apple has listed $0.00001 per share in its filings.

Low par values are deliberate. Historically, face value signaled that a company would not sell shares below a set price and gave investors a reference point at a time when financial information was scarce. Today, some U.S. states tie incorporation fees or franchise taxes to the par value of authorized shares, so companies can reduce those costs by choosing a very low figure. Many states also permit no-par stock, which has no face value at all.

The total par value of issued shares forms the company’s legal capital (often recorded as “common stock” on the balance sheet). Corporate law in many jurisdictions restricts distributions that would cut into this capital, so it acts as a kind of cushion for creditors. Only capital above that amount can be paid out as dividends.

In some markets face value matters more in daily use. In India, for example, shares commonly carry face values such as ₹10, ₹5 or ₹1, and companies often announce dividends as a percentage of face value. A 50% dividend on a ₹10 face value share means ₹5 per share, which can be a small fraction of the share’s market price.

Calculating Face Value

Face value is set by the issuer, so you look it up rather than calculate it. For a bond it appears in the offering documents, on the trade confirmation and in brokerage holdings, usually as “par amount” or “face amount.” For a share it appears in the corporate charter, the stock certificate and the equity section of the company’s annual report (for example, “common stock, $0.01 par value”).

What you do calculate is the dollar value of a position or a price:

Total face value of a bond holding = number of bonds × face value per bond. Ten bonds at $1,000 face equal $10,000 of face value.
Dollar price from a bond quote. Bond prices are quoted as a percentage of face value. A quote of 98.5 on $10,000 face value means a price of $9,850, and a quote of 102 means $10,200. Buyers of coupon bonds between payment dates also pay accrued interest on top of this price.
Annual coupon = coupon rate × face value.
Legal capital of a company = shares issued × par value per share.

Stock splits change face value per share. In a 2-for-1 split of a par-value stock, the number of shares doubles and par per share typically halves, so total legal capital stays the same.

Interpreting Face Value

For bonds, compare the price with face value:

Price relative to face value	Term	What it usually reflects
Above face value	Premium	Coupon rate higher than current market yields for similar risk
Equal to face value	Par	Coupon rate in line with market yields
Below face value	Discount	Coupon rate lower than market yields, higher perceived credit risk, or a zero-coupon structure

The relationship runs through interest rates. If rates rise after a bond is issued, new bonds offer higher coupons, so existing bonds must fall in price to compete. If rates fall, existing bonds with higher coupons become more valuable and trade at a premium. Time to maturity and the issuer’s credit rating also move prices. As maturity approaches, a bond’s price tends to converge toward face value, assuming the issuer remains able to pay.

For stocks, there is little to interpret. A share with a $0.01 par value trading at $50 is not “expensive,” and one trading near its par value is not “cheap” on that basis alone.

Example of Face Value

Hypothetical bond example. A company issues a 10-year bond with a $1,000 face value and a 5% annual coupon, paid once a year. The holder receives $50 each year and $1,000 at maturity.

Suppose that shortly after issuance, yields on comparable bonds rise to 6%. Discounting the remaining cash flows at 6% (ten annual $50 coupons plus $1,000 at the end) gives a price of about $926.40. The bond now trades at a discount of roughly $73.60 below face value. A buyer at that price still receives $50 a year (a current yield of about 5.4% on the $926.40 paid) and $1,000 at maturity, and the combination works out to the 6% market yield. The measure that captures this full return, coupons plus the pull toward face value, is yield to maturity.

Hypothetical zero-coupon example. A five-year zero-coupon bond with $1,000 face value, priced to yield 4% compounded annually, sells for about $821.93 ($1,000 ÷ 1.04⁵). The investor receives nothing until maturity and then collects the full face value of $1,000, a gain of $178.07.

Hypothetical stock example. A company issues 1,000,000 shares with a $0.01 par value at $20 per share, raising $20,000,000. On the balance sheet, $10,000 (1,000,000 × $0.01) is recorded as common stock, and the remaining $19,990,000 is recorded as additional paid-in capital. Face value accounts for a tiny slice of the money raised, and once the shares trade, their market price will move independently of both numbers.

Limitations of Face Value

It is not a measure of worth. A bond’s face value is what the issuer promises, not what the bond is worth today. Repayment in full assumes the issuer does not default, so bonds of troubled issuers can trade far below par.
It ignores time value of money. $1,000 received in 20 years is worth much less today than $1,000 received next year, even though the face value is identical.
It is guaranteed only at maturity. Sell early and you receive the market price, which may be lower. Inflation-linked principal, amortization and early calls can also change the amount you receive or when it arrives.

Face value vs. par value. These are the same thing. “Par” is more common in bond trading, “face value” on certificates and in everyday use, and “nominal value” in accounting and in some international markets. Life insurance uses a related term: a policy’s face amount is its stated death benefit, though loans against the policy or riders can change what is actually paid.

Face value vs. market value. Market value is the price at which a security currently trades, set by supply and demand among buyers and sellers. For bonds it shifts with interest rates, credit risk and time to maturity. For stocks it reflects investor expectations about earnings and growth and is usually many times the par value.

Face value vs. a bond’s price. Face value is fixed at issuance for a standard bond; price fluctuates daily. Price is quoted as a percentage of face value, so the two are directly linked: a price of 100 means the bond trades at par.

Face value vs. principal. For a standard bond, principal and face value are the same at issuance. Principal can later mean the amount still outstanding, which differs from face value on amortizing or inflation-linked debt.

Face value vs. book value. Book value is total assets minus total liabilities as recorded on the balance sheet, often expressed per share. It reflects what shareholders would theoretically receive if the company sold its assets at recorded values and paid off its debts. Book value is built from the company’s entire financial position; face value is a single figure assigned at issuance.

Face value vs. intrinsic value. Intrinsic value is an estimate of what a security is truly worth. For a stock, it is based on fundamentals such as earnings, assets and growth. For a bond, it is the present value of its coupons and face value, discounted at a rate that reflects risk and prevailing interest rates.

Face value vs. NAV. Net asset value is the per-share value of a fund’s holdings minus its liabilities, used for mutual funds and ETFs. A bond fund holds many bonds with their own face values, but the fund itself has no maturity and no face value to repay, so its NAV moves with the market value of its portfolio.

The Bottom Line

Face value matters most to bond investors, because it sets the coupon dollars and the amount repaid at maturity if the issuer does not default. Investors who sell early receive the market price instead, which moves with interest rates, credit risk and time to maturity. For stock buyers, par value is mainly a legal and accounting figure and says little about whether a share is cheap or expensive.