# meaning of face value as a percentage

What does it mean conceptually when the face value of a bond is equal to 100%? What does it mean when the FV is higher or lower 100%

Face value is the dollar amount at which the issuer sold their bond.

The percentage you mention is known as the bond quote.

It tells what percentage of the bond’s face value is the current market price.

It can be calculated as:

$$\text{Bond Quote} = \frac{\text{Market Price}}{\text{Face Value}} \cdot 100$$

Bond quote $$< 100\%$$ means the bond is currently trading below Face Value, $$> 100\%$$ means it is trading above face value and $$= 100 \%$$ means it is trading at face value.

Bond prices increase gradually as time passes (keeping everything else constant), getting nearer the maturity date, converging to the $$\text{Payoff} = \text{Principal} + \text{Coupon}$$, however there may occur shocks that cause deviations in bond prices such as changes in interest rates and financial risk, the former because it dictates the time value of money (opportunity cost) and the latter because it concerns the risk of the issuer defaulting on its issued debt.