Maturity

Maturity refers to the date on which a financial instrument, such as a bond or loan, must be repaid in full, including any outstanding interest. At maturity, the issuer of the security returns the principal amount to the investor, and the obligation is considered fulfilled. The maturity date is a critical factor in determining the interest rate, risk, and duration of an investment. Short-term instruments have a maturity of less than one year, while long-term instruments may have maturities of several decades.

Example

A corporate bond with a face value of $1,000 and a maturity date of December 2025 will return the principal amount to the bondholder at that time.