Maturity Date
Definition
The date on which a financial instrument such as a bond or CD reaches its full term and the principal is repaid to the investor.
The maturity date is the point at which a debt instrument expires and the borrower must repay the full principal amount to the investor or lender. It applies to bonds, certificates of deposit, notes, and other fixed-income instruments.
Bonds have maturity dates ranging from short-term (under 3 years) to intermediate (3-10 years) to long-term (10-30 years). Generally, longer maturities carry higher yields to compensate investors for the additional risk of locking up money for extended periods.
Understanding maturity dates is crucial for cash flow planning and investment strategy. Laddering maturities across different time horizons provides regular access to funds while still capturing higher long-term rates. Selling a bond before its maturity date on the secondary market may result in a gain or loss depending on current interest rates.
Related Calculators
Related Terms
Bond
financeA fixed-income debt instrument where an investor loans money to a borrower (typically a corporation or government) for a defined period at a fixed interest rate.
Treasury Bond
financeA long-term debt security issued by the U.S. government with a maturity of 20 or 30 years, considered one of the safest investments available.
Yield
financeThe income return on an investment, usually expressed as an annual percentage based on the investment's cost or current market value.
Zero-Coupon Bond
financeA bond that pays no periodic interest, instead sold at a deep discount and redeemed at face value upon maturity.
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