Republic of uzbekistan ministry of higher education, science and innovations

Nominal value and understanding nominal value
Nominal value is a critical component of many bond and preferred stock calculations, including interest payments, market values, discounts, premiums and yields. Nominal value of common stock will usually be much lower than its market value due to supply / demand considerations while the nominal value of preferred stock should be more in line with its market value. The nominal value of a bond will vary from its market value based on market interest rates.
Nominal and real values also play a vital role in economics, whether it takes into account nominal GDP versus real GDP or nominal interest rates versus real interest rates. Real values factor in the changes in purchasing power. While the nominal rate of return reflects an investor's earnings as a percentage of their initial investment, the real rate of return takes inflation and the actual buying power of the investor's earnings into account.
Nominal Value of Bonds
For bonds, the nominal value is the face value, which is the amount repaid to the bondholder at maturity. Corporate, municipal, and government bonds typically have face values of $1,000, $5,000, and $10,000, respectively.
If a bond's yield to maturity (YTM) is higher than its nominal interest rate (coupon rate) then the real value of the bond will be lower than its face (nominal) value and the bond is said to selling at a discount to par, or below par. Conversely, if the YTM is lower than its nominal interest rate then the real value of the bond is higher than its face value and it is said to be selling at a premium to par, or above par and if they are the same then the bond is selling at its nominal, or par, value. Zero-coupon bonds are always sold at a discount to nominal value, because the investor does not receive interest until the bond matures. The formula for calculating bond market value is:
Bond price = SUM(coupon payments) / (1 + market yield) ^ i + Face Value / (1 + market yield) ^ n
Where: coupon payments = face value * coupon rate; i = each year; n = total number of years
For example, a 3 year corporate bond issue with face value of $1000 and a coupon rate of 10%. The annual coupon payments would be $100 ($1000 * 10%). If the market rate (YTM) is higher than the coupon rate, say 12%, then the market value of the bond would be selling at a discount to par (less than $1000).