Why might the face value of a bond differ from its market value?
The face value of a bond is the value printed on it. But the market value is the actual market price of the bond. Prices of bond increase or decrease as the organization’s profit ratio goes up or down. A bond of face value 50$ may have a market value of 30$ if the organization is running at heavy loss. And it might have a market value of $65 when the organization is making good profit. Its so simple buddy. The face value is the amount invested by the bond holder for the organization. And the market value is what the bond is worth. As bonds return dividends to the holder at a fixed rate that depends on the company’s profit (say 0.8 % of the profit), so a heavy profit making organization’s bond will have a market value greater than its face value. Also, it depends solely on the bond broker to decide the market value, that is the price at which the bind will be sold.
