Denomination
What It Is:
Usually associated with currency, a denomination is the value specified on a monetary instrument.
How It Works/Example:
Denomination values are graduated and usually divisible by some common denominator (hence, 'denomination'). For example, in addition to the $1 bill, denominations of U.S. paper money include $5, $10, $20, $50, and $100 notes, all divisible by 5.
Though denominations are generally discussed with regard to currency, financial instruments such as bonds are also generally issued in different denominations.
Why It Matters:
Where currency is concerned, denominations provide the bearer with a range of values depending on how much money he or she will need to spend. In the case of financial instruments such as bonds, denominations provide investors with a range of values based on what they are able to afford.
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Cached on May 23, 2012, 9:01 am