verðgildis

Verðgildis, also known as nominal value or face value, refers to the value assigned to a financial instrument, currency, or security at a specific point in time, typically printed or inscribed on the item itself. The term is most commonly used in the context of bonds, banknotes, and shares, representing the amount that will be paid back or the value printed on the asset.

In the case of bonds, verðgildis denotes the amount that the issuer promises to pay the holder at maturity. This nominal amount is used to calculate interest payments, which are often specified as a percentage of the verðgildis. For example, a bond with a nominal value of 1,000 currency units and an interest rate of 5% will pay 50 units annually.

For banknotes and coins, verðgildis indicates the legal tender value assigned and recognized by the issuing authority. Although the market value of these currency units can fluctuate based on economic conditions, their nominal value remains fixed on the material.

In equity markets, the term is less frequently used but may refer to the face value of a share, which often represents the original value assigned when the share was issued. This value typically has little relation to the current market price of the share, which is influenced by various economic factors and company performance.

Understanding verðgildis is important in finance for assessing the initial value of securities and liabilities, although actual market value can differ significantly from the nominal value depending on market conditions and economic factors.