What term describes an investment’s face amount typically represented in debt securities?

What term describes an investment’s face amount typically represented in debt securities?

• A. Dividend yield
• B. Market price
• C. Par value
• D. Accrued interest

Answer: (C)

The term that describes an investment's face amount typically represented in debt securities is "par value." Par value, also known as face value or nominal value, is the amount that a bond or other debt security will be worth at maturity. It is crucial for investors because it represents the minimum amount they will receive when the security matures, assuming the issuer does not default. For debt securities, par value serves as a reference point for determining the interest payments, which are usually calculated as a percentage of the par value. Understanding par value is essential for assessing the security's yield and overall investment attractiveness. Other terms mentioned have different meanings; for instance, dividend yield pertains to stock investments and relates to the income earned from dividends relative to the share price, while market price reflects the current trading price of a security. Accrued interest refers to interest that has accumulated on a debt security but has not yet been paid, which is important when buying or selling such securities between interest payment dates.

The term that describes an investment's face amount typically represented in debt securities is "par value." Par value, also known as face value or nominal value, is the amount that a bond or other debt security will be worth at maturity. It is crucial for investors because it represents the minimum amount they will receive when the security matures, assuming the issuer does not default.

For debt securities, par value serves as a reference point for determining the interest payments, which are usually calculated as a percentage of the par value. Understanding par value is essential for assessing the security's yield and overall investment attractiveness.

Other terms mentioned have different meanings; for instance, dividend yield pertains to stock investments and relates to the income earned from dividends relative to the share price, while market price reflects the current trading price of a security. Accrued interest refers to interest that has accumulated on a debt security but has not yet been paid, which is important when buying or selling such securities between interest payment dates.