Nominal value

Nominal value is the face value of a security. This amount is printed on the front of the security certificate.  For example, the nominal value of a share of common stock with a par value of $0.01 is $0.01. A common nominal value for a bond is $1,000, which is also the amount that the issuer will pay to bond holders when the bond matures. Higher nominal values are usually associated with the bond offerings of government entities. The nominal value of a share is usually significantly less than the amount that an investor can expect to receive from owning the share.

Nominal value differs from market value, since the market value of a security will vary in accordance with supply and demand. Market value is usually much higher than the nominal value of a share, while it may be higher or lower than the nominal value of a bond, depending on market interest rates.

Related Courses

Corporate Finance 
Treasurer's Guidebook