What term describes a bond's stated value, which is to be paid to the bondholder at maturity?

What term describes a bond's stated value, which is to be paid to the bondholder at maturity?

• A. Market value
• B. Discount value
• C. Par value
• D. Nominal value

Answer: (C)

The term that describes a bond's stated value, which will be paid to the bondholder at maturity, is known as par value. Par value is crucial because it represents the amount that the bond issuer agrees to repay the bondholder upon maturity. This value remains constant regardless of fluctuations in the market price of the bond during its term. Understanding par value is essential for investors, as it helps them assess the bond's yield and overall investment return. It distinguishes itself from other terms related to bonds; for example, market value fluctuates based on supply and demand factors in the market, while nominal value usually refers to the face value without any adjustments for inflation or interest. Thus, par value is a fundamental concept in bond investment and reflects the issuer's obligation to the bondholder.

The term that describes a bond's stated value, which will be paid to the bondholder at maturity, is known as par value. Par value is crucial because it represents the amount that the bond issuer agrees to repay the bondholder upon maturity. This value remains constant regardless of fluctuations in the market price of the bond during its term. Understanding par value is essential for investors, as it helps them assess the bond's yield and overall investment return. It distinguishes itself from other terms related to bonds; for example, market value fluctuates based on supply and demand factors in the market, while nominal value usually refers to the face value without any adjustments for inflation or interest. Thus, par value is a fundamental concept in bond investment and reflects the issuer's obligation to the bondholder.