What is a contract maturity date?
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What is a contract maturity date?
The maturity date is the date on which the principal amount of a note, draft, acceptance bond or other debt instrument becomes due. The maturity date also refers to the termination date (due date) on which an installment loan must be paid back in full.
How do you calculate maturity date?
When the loan date and number of days of the loan are known, the maturity date can be found by subtracting the days remaining in the first month from the number of days of the loan. Continue subtracting days in each succeeding whole month until you reach a month with a difference less than the total days in that month.
What does it mean when a bond matures?
A bond’s term to maturity is the period during which its owner will receive interest payments on the investment. When the bond reaches maturity, the owner is repaid its par, or face, value. The term to maturity can change if the bond has a put or call option.
What happens to the price of a bond as it approaches maturity?
As a bond approaches maturity, its price moves closer to its face value — the contractual amount that will be repaid at maturity. If a bond is trading above face value, its price will come down; if it is trading below face value, its price will go up.
Do you have to hold a bond until maturity?
Investors who hold a bond to maturity (when it becomes due) get back the face value or “par value” of the bond. But investors who sell a bond before it matures may get a far different amount. For example, if interest rates have risen since the bond was purchased, the bondholder may have to sell at a discount—below par.
What is the difference between a stock and a bond?
Stocks give you partial ownership in a corporation, while bonds are a loan from you to a company or government. The biggest difference between them is how they generate profit: stocks must appreciate in value and be sold later on the stock market, while most bonds pay fixed interest over time.
