Face Value is a term used to describe the nominal or initial value of a security. Generally, companies fix the face value of a stock in the Initial Public Offering (IPOs). Face value is also known as the ‘Par value’ as it is the value at which it is recorded in its books, records and share certificates. Similarly, when a company issues bonds, it issues them at a Face Value.
Key features of Face Value
Some key features of Face Value are:
a) Face value is the initial value at which a security is issued.
b) Accounting value of shares is calculated on the Face value.
c) Face value helps to calculate market value of the stock, returns and also to calculate premiums.
d) Corporate action of a company like dividends, bonus and splits are decided on the Face Value
e) Face Value remains unaffected by the prevalent market conditions
