Bars

What Is Par Value?

By Adam Levy – Updated Dec 7, 2025 at 2:20 AM EST

Key Points

Par value is a set issuance price for bonds and minimal share price for stocks.
Bond par values determine yields and coupon payments, influencing secondary market prices.
Stock par values minimally affect market value; market factors drive stock prices instead.

Par value is the face value of a bond or a share of a stock. Unlike the market price, the par value of a financial instrument is a stable price determined at the time of issuance. While both stocks and bonds can have par values, they’re much more important for bond investors.

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Coupon Rate

The fixed interest rate paid by a guaranteed-income security, usually a bond, pays the owner.

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For example, let’s imagine a company that’s issuing debt to raise capital. It issues a two-year bond with a 5% annual coupon rate. A year later, market rates have increased, and it issues a one-year bond with a 6% annual coupon rate.

Investors aren’t going to pay par value for that original two-year bond (maturing in one year) when they can get a substantially similar bond with a higher coupon rate. Instead, they will pay a price lower than par value, such that it effectively yields 6%.

They can determine that price with simple algebra. In this example, the two-year bond holder will receive par value plus 5% at maturity. The one-year bond holder will receive par value plus 6%. So they divide the older issue’s payment in one year by the new issue’s, 1.05 divided by 1.06. That equals about 99%, which is the percentage of par value investors should be willing to pay for the older issue.

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The calculations can get more complicated when there’s more than one coupon payment left for a bond. Additionally, market rates are constantly changing, so nailing down an exact price for a bond offering relative to similar offerings isn’t always possible. But it’s a framework for determining the market value of a particular bond.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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Adam Levy has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.