Mature

(noun)

The final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.

Related Terms

Examples of Mature in the following topics:

  • Maturity Date

    • The issuer has to repay the nominal amount on the maturity date.
    • The length of time until the maturity date is often referred to as the term or tenor or maturity of a bond.
    • short term (bills): maturities between 1 to 5 years (instruments with maturities less than one year are called "Money Market Instruments");
    • Normally the maturity of a bond is fixed.
    • In this case, the maturity date is the day when the bond is called.

  • Yield to Maturity

    • The formula for yield to maturity:
    • Yield to maturity (YTM) = [(Face value / Present value)1/Time period]-1
    • If you hold the bond until maturity, ABC Company will pay you $5 as interest and $100 par value for the matured bond.
    • Development of yield to maturity of bonds of 2019 maturity of a number of Eurozone governments.
    • Classify a bond based on its market value and Yield to Maturity

  • Time to Maturity

    • The length of time until a bond's matures is referred to as its term, tenor, or maturity.
    • Short term (bills): maturities between one to five years (Instruments that mature in less than one year are considered Money Market Instruments. )
    • In general, coupon and par value being equal, a bond with a short time to maturity will trade at a higher value than one with a longer time to maturity.
    • Interest rates of one-month maturity of German banks from 1967 to 2003
    • Discuss the importance of a bond's maturity when determining its value

  • Accounting for Interest Earned and Principal at Maturity

    • At maturity, firms should debit cash and credit held to maturity investments the balance of the principal payment.
    • This can result in an investor receiving less or more than his original investment at maturity.
    • Remember the original entry debited the held to maturity investment account and credit cash.
    • This can result in an investor receiving less or more than his original investment at maturity
    • Summarize the journal entry required to record a debt held to maturity

  • Amortized Cost Method

    • Debt held to maturity is shown on the balance sheet at the amortized acquisition cost.
    • The definition of a debt is held-to-maturity is a debt which the company has both the ability and intent to hold until maturity.
    • All changes in market value are ignored for debt held to maturity.
    • Debt held to maturity is shown on the balance sheet at the amortized acquisition cost.
    • Explain how a company would apply the amortized cost method to a debt held to maturity

  • Redeeming at Maturity

    • A maturity date is the date when the bond issuer must pay off the bond.
    • Maturity is generally an indication of when you as an investor will get your money back.
    • Typically, bonds stop earning interest after they mature.
    • The carrying value of bonds at maturity will always equal their par value.
    • Explain how to record the retirement of a bond at maturity

  • Chapter Questions

    • A T-bill has a face value of $20,000 with a yield to maturity of 3%, and this bill matures in 270 days.
    • If the yield to maturity is 5% and the bond matures in three years, calculate the market value of this bond.
    • If the yield to maturity is 20% and the bond matures in three years, compute the market value of this bond.
    • If the bond matures in 3 years with a face value of $5,000, calculate your yield-to-maturity (YTM).

  • Calculating Yield to Maturity Using the Bond Price

    • The yield to maturity is the discount rate which returns the market price of the bond.
    • Formula for yield to maturity: Yield to maturity(YTM) = [(Face value/Bond price)1/Time period]-1
    • As can be seen from the formula, the yield to maturity and bond price are inversely correlated.
    • With 20 years remaining to maturity, the price of the bond will be 100/1.0720, or $25.84.
    • Even though the yield-to-maturity for the remaining life of the bond is just 7%, and the yield-to-maturity bargained for when the bond was purchased was only 10%, the return earned over the first 10 years is 16.25%.

  • Par Value at Maturity

    • Par value is stated value or face value, with a typical bond making a repayment of par value at maturity.
    • A typical bond makes coupon payments at fixed intervals during the life of it and a final repayment of par value at maturity.
    • Together with coupon payments, the par value at maturity is discounted back to the time of purchase to calculate the bond price.
    • F = face value, iF = contractual interest rate, C = F * iF = coupon payment (periodic interest payment), N = number of payments, i = market interest rate, or required yield, or observed/ appropriate yield to maturity, M = value at maturity, usually equals face value, P = market price of bond.
    • Bond price is the present value of coupon payments and the par value at maturity.

  • Maturity

    • The maturity stage follows the growth stage in the product's life cycle (see ).
    • However, despite this, sales continue to grow in the early part of the maturity phase.
    • The stage that lasts the longest in the product life cycle is the Maturity stage.
    • So, during the maturity stage, the following occurs:
    • Identify the market conditions of a product in stage 3, maturity of the product life cycle.