Face value

The principal amount (i.e., monetary value) of a bond, note, or mortgage as stated on the certificate and redeemable at maturity. A corporate bond, for example, may have a $1,000 face value, and although that price can fluctuate between the date of issue and the date of maturity, the bond will be redeemed at face value when it matures, unless the issuer defaults. The face value is also the dollar amount on which interest payments are calculated, so an 8% bond with a face value of $1,000 will pay bondholders $80 a year. Face value is also known as par value.