Face Value (Par Value)

Face value is the amount a bond or note promises to repay at maturity, printed on the instrument.

A quick example

What it means for you

It anchors coupon math and tells you what you get back at maturity.

Picture this

A retiree buys a newly issued 10-year bond at its $1,000 face value, planning to hold it to maturity. Two years later, interest rates rise and the same bond trades at $870. The retiree’s brokerage statement shows a loss — but if they hold to maturity, the issuer still repays the full $1,000 plus the remaining coupons. The paper loss only becomes real if they sell early. Face value is the promise; market price is the mood; the patient holder gets the promise.

Common mix-ups

Market price wanders above or below face value as rates move; they are not the same.

How to apply it

When you buy a bond above face value (a premium) you take a guaranteed capital loss at maturity; below face value (a discount) you gain. Factor that into your yield-to-maturity calculation, not just the coupon.

Key takeaway

Face value is the bond’s contract: the amount repaid at maturity, the anchor for the coupon, and the number that never changes. The market price is a different thing entirely, wandering above or below face as rates move, and the gap is exactly what yield to maturity measures. A bond bought at a discount gains at maturity; one bought at a premium loses. Keep the two numbers separate in your head and the whole of fixed income becomes clearer.

Definitions reviewed by the Investing Glossary editorial team.