What is the typical relationship between Security's maturity value and par value?

In examining the typical relationship between a security's maturity value and its par value, it is fundamental to understand what each term signifies. The par value, often referred to as face value, is the nominal value of a security as stated by the issuing company. This value is important because it represents the amount that will be returned to the investor at maturity.

Maturity value, on the other hand, refers to the amount that will be paid to the holder of the security at the time of maturity, and for most securities such as bonds, this value typically equals the par value. Therefore, when a security matures, the holder is repaid the par value, assuming no default occurs. This accountability reinforces the notion that maturity value usually equals par value.

For many debt instruments, including government and corporate bonds, the interest payments made throughout the life of the security are separate from the par value, which helps clarify why at maturity the amount returned to the investor aligns closely with the par value, cementing the connection between these two values. Thus, understanding this relationship is critical for both investors and financial professionals when assessing various investment opportunities and the associated risks.