How is 'Face value' different from 'Investment Amount'?

How is 'Face value' different from 'Investment Amount'?

Face Value:

- The face value of a financial instrument, such as a bond or a share, represents the nominal value assigned to it by the issuer.

- It indicates the original value of the security as stated in the issuing documents and does not necessarily reflect its current market price.

- Face value remains constant throughout the life of the security and is used to calculate specific financial metrics, such as interest payments or dividends.

Investment Amount:

- The investment amount refers to the actual sum of money an investor contributes to purchase a financial instrument.

- Unlike face value, the investment amount is determined by market factors such as supply and demand, prevailing interest rates, and investor sentiment.

- It is the sum of the Market price and Accrued interest.

- The investment amount can vary over time as market prices fluctuate and investors buy or sell securities based on their investment strategies and objectives.



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