What is the concept of “maturity” in bonds?

Maturity refers to the date on which a bond’s principal amount, also known as the face value, is due to be repaid by the issuer. Bonds typically have a fixed maturity date, which can range from a few months to several decades. The maturity period affects the bond’s risk and return profile, with longer maturities generally associated with higher risk and potentially higher returns. During the bond’s life, the issuer pays periodic interest payments (coupons) to the bondholder. Once the bond reaches maturity, the issuer repays the principal amount, and the bondholder’s investment is returned.