In terms of bonds, what is defined as maturity?

Maturity refers to the date on which the principal amount of a bond is due to be paid back to the bondholder. It signifies the end of the life of the bond, at which point the issuer must return the face value (or par value) of the bond to the investor. Understanding maturity is crucial because it not only determines the length of time an investor will receive interest payments (coupon payments) but also impacts the bond’s interest rate environment, market price, and the overall investment strategy. Bonds can have various maturities ranging from short-term, typically under five years, to long-term, which can last 30 years or more. This distinction helps investors assess their cash flow needs, interest rate risk, and overall investment horizons.