What is known as the amount a debt security will pay at maturity?

The amount a debt security will pay at maturity is referred to as par value. This term represents the nominal or stated value of the bond, which is the amount that the issuer agrees to pay the bondholder when the bond matures. It is essential in the context of fixed-income investments since it establishes the principal amount that the investor will receive back, along with any interest payments, typically expressed as a percentage of par value.

In the case of bonds, both par value and face value are often used interchangeably, signifying the same concept that denotes the original value of the bond at issuance and the amount returned to the investor at maturity. This understanding is crucial, as it helps investors assess the potential return on investment when purchasing bonds, especially in relation to market conditions and yields. Thus, recognizing par value is fundamental to understanding the basic framework of debt securities.