At Par

In investing, the term at par is primarily used in relation to investment vehicles which have a face value, such as preferred shares, participation certificates and debt obligations like bonds. In every case, the term at par is used in relation to trades of financial instruments which are transacted at the instrument’s par value (its nominal value).

In the case of bonds, the par value is the bond’s face value. In the case of a preferred share or a participation certificate, the par value is the nominal value of the security. A security may also be traded below par (at a price lower than its face value) or above par (at a price higher than its face value).

Example: You pay 2000 Swiss francs for a top-rated bond with a face value of 2000 francs, a 1% annual interest rate and a 5-year term. 1 years later, you decide to sell your bond and invest in a higher-risk investment which delivers higher returns. You sell your bond to an investor looking for a low-risk investment vehicle at its face value of 2000 francs. In this case, you sold the bond at par – at its face value.

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