Maturity

Filed Under » , ,
Dictionary Says

Definition of 'Maturity'

The period of time for which a financial instrument remains outstanding. Maturity refers to a finite time period at the end of which the financial instrument will cease to exist and the principal is repaid with interest. The term is most commonly used in the context of fixed income investments, such as bonds and deposits.
Investopedia Says

Investopedia explains 'Maturity'

Upon maturity of a fixed income investment such as a bond, the borrower has to pay back the full amount of the outstanding principal, plus any applicable interest to the lender. Non-payment upon maturity may constitute default, which can have very severe repercussions for the borrower's business and credit rating.

The maturity of an investment is a primary consideration for the investor, since it has to match his or her investment horizon. For example, a young couple who are saving for a down payment on a condo that they intend to purchase within a year would be ill-advised to invest in a five-year term deposit, especially one that carries penalties if cashed early. A money-market fund or a one-year term deposit may be a much better choice in this case.

The term maturity is seldom used with reference to derivative instruments such as options and warrants. For such instruments, the term expiry or expiration date is used instead to refer to the fact that they have a limited life and will cease to exist after a certain time period.

Articles Of Interest

  1.

    Advisors: Tips For Providing For Older Clients

    Make sure the needs of baby boomers and their parents are met - if not exceeded.

  2. Retail Notes: A Simpler Alternative To Bond Funds

    These securities are meant to be held until maturity, removing the burden of complex pricing that sometimes plagues bonds.

  3. Get A Short-Term Advantage In The Money Market

    This investment vehicle is often the perfect stop-gap measure for growing your money.

  4. The Bear On Bonds

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.

  5. What is a tranche?

    "Tranche" is actually a French word meaning "slice" or "portion". In the world of investing, it is used to describe a security that can be split up into smaller pieces and subsequently sold to ...

  6. Why do companies issue 100-year bonds?

    Although it is rare, companies do issue bonds that exceed an average person's life expectancy. For example, multi-billion dollar companies such as the Walt Disney Company and Coca-Cola have issued ...

  7. Advanced Bond Concepts

    Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration.

  8. Bond Basics Tutorial

    Investing in bonds - What are they, and do they belong in your portfolio?

  9. Basic Investment Objectives

    You might know about different asset types, but do you know how each type contributes to a particular goal?

  10. Exploring The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Yield Elbow

    The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.

  2. Xenocurrency

    A currency that trades in markets outside of its domestic borders.

  3. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.

  4. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.

  5. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.

  6. Samurai Bond

    A yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=b62fed72592183c2c6ce0bf3fa47dbc3