Maturity
The date on which a bond's principal is repaid and the obligation ends.
Formula
Residual Maturity = Maturity Date - Today's Date, expressed in years
Unit
years
In depth
Maturity determines how long the lender's money is committed and is the main driver of a bond's price sensitivity to interest rates — longer maturity means larger price swings for the same change in yields. It should not be confused with duration, which is the weighted average time to receive all cash flows and is always shorter than maturity for a coupon-paying bond. Holding to maturity removes price risk, since the principal is repaid at face value regardless of what the bond traded at in between, but it does not remove credit risk or inflation risk. Residual maturity, not original maturity, is what matters for a bond already issued.
Worked example
A ten-year bond issued six years ago has four years of residual maturity, and behaves like a four-year bond. Its price sensitivity is roughly that of a fresh four-year bond, not that of a ten-year one.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Maturity” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.