What is the face value of a promissory note when interest is computed known as?

The face value of a promissory note, when referred to in the context of finance, is termed the principal. The principal represents the initial amount of money that is loaned or invested, which does not include any interest accrued over time. In the context of a promissory note, the principal is the amount that the borrower agrees to repay to the lender at the note's maturity.

When discussing financial instruments like promissory notes, understanding the definition of principal is critical as it forms the basis for calculating interest and determining overall repayment obligations. The amount of interest is typically calculated based on this principal; thus, recognizing the principal amount is essential for grasping how promissory notes function economically.

The other terms mentioned, while related to finance, refer to different concepts. For example, dividends relate to the distribution of profits to shareholders, while yield refers to the earnings generated on an investment over a period, including both income and capital gains. Interest itself is the cost of borrowing the principal and is calculated based on the principal amount but does not refer to the principal itself.