A term is the length of time between when a fixed-income security, such as a bond or note, is offered for sale and its maturity date.
When the term ends, the issuer repays the par value of the security, often along with the final interest payment. In general, the longer the term, the higher the rate of interest the investment pays, to offset the increased risk of tying up your money for a longer period of time.
Term is also the lifespan of a certificate of deposit (CD), called a time deposit. If you hold a CD for the entire term, which may run from six months to five years, you collect the full amount of interest the CD has paid during the term and are free to roll the principal into a new CD or use the money for something else.
- Browse Related Terms: Barbell strategy, bond, Bond swap, Buy-and-hold, Collateralized mortgage obligation (CMO), Fixed-income investment, Intermediate-term bond, Laddering, Market risk, Note, Reinvestment risk, Systematic risk, term, Tranche
The period from the time that a loan is made until it is fully paid.
the period of time assigned as the lifespan of any investment.
- Browse Related Terms: Adjustable-Rate Mortgage (ARM), amortization, balloon mortgage, Convertible ARM, Debarment, Fixed-Rate Mortgage (FRM), Interest-only mortgage, Lock-In, Lock-in agreement, Mortgage life insurance, Negative amortization, Payment Cap, Right of rescission, Self-Amortizing Loans, Swap, term, Weighted Average Life (WAL)
Also listed in: