If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount c.less than face value.
Face value is a financial term used to describe the nominal or dollar value of a security as reported by the issuer. For stocks, par value is the original price of the stock as stated on the certificate. For bonds, this is the amount paid to the holder at maturity, usually in increments of $1,000.
Face value is the amount the issuer pays the investor at maturity. Because the price of a bond fluctuates, prices are stated relative to the original par or face value. Bonds are called trading above or below par.
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