At par

At Par is a term used in finance and economics to describe a situation where the market value of a security is equal to its face value. This term is often used in the context of bonds, but can also apply to stocks and other types of securities.

Overview

In the world of finance, the term "at par" is used to indicate that a security is trading at its face value. This is the value printed on the certificate or noted in the electronic record of the security. When a security is issued at its face value, it is said to be issued at par. If it is trading in the market at its face value, it is trading at par.

Bonds

In the context of bonds, a bond is said to be trading at par if its current market price is the same as its face value. For example, if a bond has a face value of $1,000 and is currently trading in the market for $1,000, it is trading at par. This is an important concept in bond investing, as the price of a bond can fluctuate above or below its face value based on factors such as interest rates, the creditworthiness of the issuer, and the length of time until the bond matures.

Stocks

In the context of stocks, a stock is said to be trading at par if its current market price is the same as its par value. Par value is a nominal value assigned to a stock by the company that issues it. It is often a very small amount, such as $0.01 per share, and does not necessarily reflect the actual value of the stock. However, in some cases, a company may issue stock at its par value, in which case the stock would be trading at par.

Related Concepts

The concepts of premium and discount are closely related to the concept of at par. If a security is trading above its face value, it is said to be trading at a premium. If it is trading below its face value, it is said to be trading at a discount.

See Also

• Face Value
• Market Value
• Bond (finance)
• Stock
• Premium (finance)
• Discount (finance)