Series 79: Par Value And Market Prices

Par Value and Market Prices

The par value or face value of a bond is the amount of money for which the bond will be redeemed at maturity. The par amount of corporate bonds is typically $1,000. The par value of a bond has additional importance because, as with preferred stock, the interest paid to the holder is a stated percentage of the par value.

For reasons we discuss later, the par value of a bond is usually not the same as its market price, which changes in response to in