A transaction’s or financial instrument’s maturity is the point at which it must be renewed, or it will no longer be valid. Deposits, spot foreign exchange trades, forward trades, interest rates and options, loans, commodity swaps, and fixed income securities like bonds are all examples of transactions for which the word is frequently used.
To attract new investors, financial institutions occasionally change maturity dates for a brief time. A bank may provide a greater rate of return for a short-term certificate of deposit (CD) while it is offering promotional CDs. When the promotional CD reaches maturity, it will often renew at the same rate and duration as a regular CD.
Principal and interest must be repaid in full on the maturity date for some financial products, such as loans and deposits. Others, including forex transactions, arrange for the delivery of a good. Others, like interest rate swaps, have a succession of cash flows, the last of which happens at maturity.
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