face value
Face value is the original price printed on a share or bond when it is first created, not what it is worth if you tried to sell it today.
In plain English
Remember when naira notes still had that crisp, unbent feel, and the number printed on them told you exactly what they were worth, no arguments, no negotiation. A ₦500 note was ₦500 whether it was in your pocket or under your mattress. Shares and bonds have a version of that printed number too, except unlike cash, what is printed on them and what they actually trade for in the market can drift very far apart over time.
That printed number is called face value, sometimes called par value. When a Nigerian company first lists on the stock exchange, it might set the face value of each share at ₦1 or ₦0.50. This is largely an accounting and legal figure, used to work out things like minimum share capital. It is almost never the price you pay to buy the share or the price you get when you sell it.
Bonds make this clearer. Say the Federal Government issues a bond with a face value of ₦1,000,000. That is the amount they promise to pay you back when the bond matures, and it is also the amount used to calculate your interest payments. But between now and maturity, that bond can be bought and sold at prices above or below ₦1,000,000, depending on interest rates and how much people want it.
Someone in Leeds sending money home to invest in Nigerian treasury bills will see this play out directly. The face value tells them what they get back at the end. The market price tells them what they are paying right now to get there, and the gap between the two is where the real return is hiding.
A Nigerian corporate bond has a face value of ₦100,000 and pays 12% interest yearly, so you receive ₦12,000 a year regardless of what the bond is currently trading for in the market.
Questions people ask
Is face value the same as market value?
No. Face value is fixed and printed when the share or bond is created. Market value moves daily based on demand, company performance, and interest rates, and can be higher or lower than face value.
Why does face value matter if I never use it to buy or sell?
It matters for calculating things like dividend percentages, bond interest payments, and a company's legal minimum share capital, even though your actual trading happens at market price.
Can face value change after a share or bond is issued?
Face value itself rarely changes, though a company can technically alter it through actions like a stock split. What changes constantly is the market price around it.
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