Par Value of Bonds Definition
The par value of bonds definition refers to the principal – the amount of money the bondholder receives when the bond matures. Par value is also called face value or nominal value. It is the amount stipulated in the bond contract. However, par value does not include interest payments. Bond interest rates are quoted as a percentage of the par value of the bond. While bond prices can fluctuate, the bond always matures at par value. However, if the bond issuer defaults, the bondholder may only receive a portion of the par value or nothing at all.
A bond priced above par value is selling at a premium and a bond priced below par value is selling at a discount.
Par values for corporate bonds, municipal bonds, and federal government bonds are usually $1,000, $5,000, and $10,000, respectively.
Bond Face Value
The face value of a bond is the same as the par value of a bond. It is the principal amount.
Nominal Value, Bond
The nominal value of a bond is the same as the par value of a bond. It is the principal amount.
See Also:
Common Stock
Company Valuation
Convertible Debt Instrument
Coupon Rate Bond
Covenant Definition of a Bond Contract
Fixed Income Securities
Long Term Debt
Maturity Date
Non-Investment Grade Bonds
Owner’s Equity
Preferred Stocks
