Friday, May 29

Face Value of a Bond

The Face Value of a Bond is the stated value on the face of the bond and is also known as Par Value. It represents the amount of borrowing by the firm which it specifies to repay after a specific period of time i.e. at the time of maturity.

For example, if the Face Value of the bond is Rs 100 and the bond is issued at 8% coupon rate, the Interest would be calculated on the Face Value of the bond. That is, annual interest would be
Rs 100 x 8% = Rs 8 per annum.

Generally, the bonds may be issued or traded at a Par (Face Value), at a premium or at a discount to Face Value.

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