Face value

The face value is the value corresponding to the amount on a security.

The securities embodying some property right or receivable deeds. The on the securities market in their most general form, they embody some kind of debt or share. The most common form of the former is a bond, the best-known type of the latter is a share.

Such a security can have several values, and each of these values characterizes the given security in different ways. The first of these is the nominal value, which means the value written on the security itself, dematerialized securities, is included among its defining characteristic data.

This sounds a bit complicated at first, but luckily there is a "paper" that everyone knows and that works just like that: it's money. The amount that appears on the money (or in its dematerialized form on the "bank account money") is its face value.

In other words, the nominal value indicates the value of the security at the time of issue. In the case of bonds, the total nominal value of the bond series means the total capital debt, in the end its a for credit the amount that the issuer received from those who purchased the bond by issuing the bond. 

In the case of shares, the share issuer company on its registered capital amount within is given by the sum of the nominal value of the issued shares. In other words, the product of the number of shares and their nominal value gives the company's registered capital, hence the share note taker, i.e. the first buyer can ultimately calculate his own ownership share if he bought the paper at face value.

However, it is far from certain that someone will buy the given security at face value, in fact, buying at face value is an atypical case. Securities are typically traded at a value determined by the market, be it even a first IPO obsession private offering, or later stock exchange obsession over the counter trading. This is called the market rate or exchange rate value. 

All of this is also true in bond trading, as it may be caused by the changing interest rate environment interest rate risk it can even strongly influence the price of bonds. At the same time, the share price value is the most important value in the case of shares, since this, multiplied by the total number of shares, also shows the value of the entire company. This amount is often the company as its market capitalisation are mentioned.

A third category of value is also used primarily for shares, namely papers intrinsic value. This represents the fair value of the given stock, which is not based on market trading, but rather on the various valuations created by securities market analysts. company evaluation are determined through model estimates. Of course, these can be lower or even higher than the current market value. It is no wonder that such analyst estimates can often have a strong impact on the market exchange rates.