3.8.6.1. Face-Amount Certificate Companies
A face-amount certificate company issues debt securities, called face-amount certificates. The certificates are backed by offering the company’s assets, such as real property or other securities, as collateral. Issuers of face-amount certificates promise to pay a stated amount (the face amount) to the investor at a future time specified by contract. In return, investors pay the issuer a fixed amount of money, either as a lump sum payment or in periodic installments. When the investor pays for the certificate in a lump sum, the investment is known as a fully paid face-amount certificate.
