Definition for : Par value

"Par Value" (also called "Nominal value" or "Face value") is the reference Value of a financial instrument at issue. This is the Nominal value of a Share, and subsequently via trading the quoted Share price diverges and goes up or below the par Value. Likewise, for a Debt instrument, the Market price will move to reflect factors, such as prevailing and forecast Interest rates, or the issuer's Creditworthiness. As a result, the par Value will only serve to determine the amount of Principal to be repaid by the borrower according to the pre-determined repayment schedule (also called Amortisation schedule).

(See Chapter 21 Other debt products of the Vernimmen)

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