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Simple English definitions for legal terms
face value
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A quick definition of face value:
Face value is the amount of money that is printed on a security, like a bond or a stock, when it is first issued. It is the value that the security is worth at the time it is created. For bonds, the face value is the amount of money that the bondholder will get back when the bond matures. For stocks, the face value is the minimum amount of money that a company needs to keep per share.
A more thorough explanation:
Definition: Face value is the value of a security that is stated at the time of its issuance. It is commonly used for stocks and bonds. For bonds, face value is the same as par value, which is the amount that the bondholder will receive at maturity. For stocks, face value refers to the minimum amount of capital that a corporation is required to maintain per share.
- A bond with a face value of $1,000 will pay the bondholder $1,000 when it matures.
- A stock with a face value of $0.01 means that the corporation is required to maintain at least $0.01 of capital per share.
These examples illustrate how face value is used for both bonds and stocks. In the case of bonds, the face value is the amount that the bondholder will receive at maturity. For stocks, the face value is the minimum amount of capital that a corporation is required to maintain per share.