Bond Term

A bond term or bond tenure is the amount of time between the date on which a bond is issued to an investor and the date on which the bond reaches maturity.

Bond terms are normally made up of multiples of 1 year, with 1 year being the shortest possible term.

In the case of a conventional bond, the bond principal is repaid at the end of the bond term. A perpetual bond, on the other hand, does not have a bond term or a maturity date and principal is never repaid – except in the event of issuer bankruptcy.

Standard bonds have coupons which can be redeemed for interest at regular intervals throughout the bond term (every year, for example). The interest of accrual bonds accrues throughout the bond term to take advantage of interest compounding, and is paid out along with the principal at the end of the bond term.

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