What is a 'maturity date' in finance?

What is a 'maturity date' in finance?

• A. The date interest rates are recalculated
• B. The date when investments begin to accrue interest
• C. The date when a financial obligation is due for repayment
• D. The date when a company reports its annual earnings

Answer: (C)

A 'maturity date' in finance refers to the specific date when a financial obligation, such as a loan, bond, or other type of investment, is due for repayment. This date marks the end of the investment period, and once it is reached, the principal amount is typically repaid to the investor or lender. Additionally, it is often accompanied by the payment of any accrued interest up to that point. Understanding the maturity date is crucial for both investors and borrowers because it defines the timeline for returns or the obligation of repayment. It also plays a vital role in various financial strategies, such as cash flow management and interest rate risk assessment. By knowing the maturity date, investors can align their investment goals with their cash flow needs, while borrowers can plan for their repayment schedules accordingly. The other options focus on different aspects of finance that do not define the maturity date itself, such as interest rate recalculation or financial reporting timelines.

A 'maturity date' in finance refers to the specific date when a financial obligation, such as a loan, bond, or other type of investment, is due for repayment. This date marks the end of the investment period, and once it is reached, the principal amount is typically repaid to the investor or lender. Additionally, it is often accompanied by the payment of any accrued interest up to that point.

Understanding the maturity date is crucial for both investors and borrowers because it defines the timeline for returns or the obligation of repayment. It also plays a vital role in various financial strategies, such as cash flow management and interest rate risk assessment. By knowing the maturity date, investors can align their investment goals with their cash flow needs, while borrowers can plan for their repayment schedules accordingly.

The other options focus on different aspects of finance that do not define the maturity date itself, such as interest rate recalculation or financial reporting timelines.