What signifies a bond's maturity date?

A bond's maturity date is significant because it is the specific date when the bondholder is entitled to receive the principal amount back from the issuer. This date marks the end of the bond's life cycle, at which point the issuer must repay the bond's face value to the bondholder. Prior to the maturity date, the bondholder may receive periodic interest payments, but the maturity date itself is strictly associated with the return of the original investment.

Understanding the maturity date is crucial for investors because it influences the bond's duration and the time frame for which they are committing their capital. Investors often consider maturity dates when assessing the risks and potential returns of a bond investment, as longer maturity dates may carry greater interest rate risk while shorter maturities may offer more liquidity and less exposure to rate fluctuations.