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Finance: What is the Maturity of a Bond? 95 Views
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What is the maturity of a bond? Maturity refers to the time when an investment ends. When maturity happens, the investor is either on the hook for the cash or is paid out, depending on the nature of the investment. In some cases they choose and are able to extend the investment, in which case a new maturity date would be established.
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Transcript
- 00:00
finance a la shmoop what is the maturity of a bond ?oh come on.
- 00:08
doorbell bash, and prank phone calls whoopee cushions for the teacher? like how mature [person rings door bell]
- 00:13
is that ? right well a bond matures when it comes due. that is a company borrows a
- 00:17
hundred million bucks in 2019 for ten years paying five percent interest or
- 00:22
five million dollars a year to rent that money along the way, and then 2029 comes
Full Transcript
- 00:27
around and well the bond matures. and lenders have that hundred million [bond is stamped]
- 00:31
dollars to the company get how much well if the company pays off its bond like it
- 00:36
promised then that last year 2029 the lenders get a hundred five million
- 00:41
dollars in that final year -that is they get the five million bucks in interest
- 00:45
or rent on the money that year and then they get their original principal back.
- 00:49
just like the person who borrowed it promised what happened that is the bond
- 00:52
will have matured. so goodbye whoopee cushions, and late night parties in hello
- 00:57
NPR in a responsible bedtime. [girl snores ]
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