Question

if cheri buys a zero coupon bond at $5000 and the face value amount is stated as $10,000, how much will she receive when the bond matures in 10 years?

Answer 1

When Cheri buys a zero coupon bond at $5000 and the face value amount is stated as $10,000, the amount she'll receive when the bond matures in 10 years is $10000.

What if the face value?

The face value of a bond refers to how much it will be worth when it matures. In other words, it is the value that the bondholder will receive when their investment matures (assuming the issuer does not call or default on the bond).

The primary distinction between a bond's face value and its price is that the face value is fixed, whereas the price varies. Whatever amount is set for face value remains constant until the bond matures. When the bond matures, the bond holder will receive the face value of the bond.

As a result, when she reaches maturity, she will receive $10,000.

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