What does the 'par' or 'face' value represent in fixed income securities?

The 'par' or 'face' value of a fixed income security is the amount that will be paid to the investor upon maturity. This value is predetermined at the issuance of the security and represents the nominal value of the bond. When an investor holds a bond until maturity, they can expect to receive this face value back, making it a key feature of fixed income securities.

In contrast, the current market value of the security can fluctuate based on interest rates and market conditions, and thus is not represented by the par value. The interest rate, often referred to as the coupon rate, indicates the bond's yield but does not reflect the fixed repayment at maturity. The total return encompasses both the interest earned and any capital gains or losses due to fluctuations in the market value but does not specifically represent the fixed amount received at maturity.