Face value
Market basicsAlso called: Par value, Nominal value
The nominal value assigned to a share in the company’s capital accounts, commonly ₹10, ₹5, ₹2 or ₹1 in India.
In plain terms
A bookkeeping figure with no relation to what the share is worth. Dividend percentages are declared against it, which is how a "300% dividend" turns out to be ₹6.
Read the full lesson →Bond
Market basicsA tradeable loan on which the issuer pays a fixed coupon for a defined term and returns the face value at maturity.
In plain terms
Because the coupon is fixed, the price is what has to move to keep the bond competitive with what new borrowers are paying. That seesaw is why debt funds bought for safety can lose money in a rate-hiking cycle.
Read the full lesson →Coupon
Market basicsThe fixed periodic interest a bond pays, expressed as a percentage of its face value.
In plain terms
Not your return. Buy above face value and the premium is a loss spread across the holding period, which yield to maturity captures and the coupon does not.
Read the full lesson →Stock split
Market basicsDivision of a share’s face value, increasing the share count and reducing the price proportionally.
In plain terms
Same as a bonus in effect, different in accounting. Also creates nothing.
Read the full lesson →Pull to par
Market basicsAlso called: Pull to redemption
The movement of a bond’s price towards the amount that will be repaid, as the repayment date approaches, at an unchanged yield.
In plain terms
It has a sign, and the price tells you which: below face value the drift is upward, above it the drift is downward. So part of the trend on a bond chart is the calendar rather than anybody’s opinion — and it disappears entirely on a perpetual instrument, which has no repayment date to converge on.
Read the full lesson →