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- Maturity Date Definition Example - InvestingAnswers
Debt instruments such as bonds, CDs, and commercial paper are issued with a lifespan that terminates on a specific date, known as the maturity date The maturity date represents the point at which the issuing party must return the principal or par value associated with the security, in addition to all unpaid interest Say an investor bought a
- Maturity Definition Example - InvestingAnswers
How Does a Maturity Work? Let's assume that on January 1, 2000, you purchased an XYZ Company bond that had a 10-year maturity That means that on January 1, 2010, XYZ Company will pay you (or whomever you happen to sell the bond to) the face value (also called the par value) of the bond The face value is essentially the size of the I O U
- Final Maturity Date Definition Example - InvestingAnswers
If the bond's final maturity date is 31 December 2019, the $500 in interest (($1,000 * 0 05) * 10 = $500) plus the original $1,000 par principal must be paid in full no later than this date with no outstanding balance
- Balloon Maturity Definition Example - InvestingAnswers
How Does Balloon Maturity Work? Unlike a loan whose total cost (interest and principal) is amortized -- that is, paid incrementally during the life of the loan -- a balloon loan's principal is paid in one sum at the end of the term That sum is called the balloon payment (or sometimes the bullet), and its due date is the balloon maturity
- Yield to Maturity (YTM) Definition Example - InvestingAnswers
A yield to call (YTC) is the total return that an investor will receive if the bond is held until the call date (or whenever the bond issuer has the right to redeem it) This date is usually before the full maturity date The YTC is calculated based on the time until the call date, the market price, and the bond’s coupon rate
- Weighted Average Maturity (WAM) Definition Example - InvestingAnswers
Weighted Average Maturity Calculation with Example The WAM can be calculated by determining the weight of each maturity in the average, multiplying that weight by the security’s maturity, and summing the weighted maturities The weight is the proportion of total portfolio value that each security represents
- Perpetual Bond Definition Example - InvestingAnswers
Although there is usually no set maturity date, perpetual bonds may be structured by the issuer to allow the bonds to be callable after a set period of time, usually between 5 and 10 years This is especially important if the interest rates fall sharply and the issuer needs to reduce the interest cost
- How Do Preferred Stocks Work? - InvestingAnswers
On this pre-set date or anytime after, the issuer has the option to buy back the shares from you If the company decides to do that, they would pay you the par value in cash for each share you own Companies don't call their preferreds very often since they have to come up with the cash to do it Some preferred shares may also have a ' maturity
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