what is term to maturity 
a bond s term to maturity is the length of time during which the owner will receive interest payments on the investment when the bond reaches maturity the principal is repaid bonds can be grouped into three broad categories depending on their terms to maturity short term bonds of one to three years intermediate term bonds of four to 10 years and long term bonds of 10 to 30 years 1understanding term to maturitygenerally the longer the term to maturity is the higher the interest rate on the bond will be and the less volatile its price will be on the secondary bond market also the further a bond is from its maturity date the larger the difference between its purchase price and its redemption value which is also referred to as its principal par or face value the interest rate on long term bonds is higher to compensate for the interest rate risk the investor is taking on the investor is locking in money for the long run with the risk of missing out on a better return if interest rates go higher the investor will be forced to forego the higher return or sell the bond at a loss in order to reinvest the money at a higher rate the term to maturity is one factor in the interest rate paid on a bond the longer the term the higher the return a short term bond pays relatively less interest but the investor gains flexibility the money will be repaid in a year or less and can be invested at a new higher rate of return 1in the secondary market a bond s value is based on its remaining yield to maturity as well as its face or par value for many bonds the term to maturity is fixed however the term to maturity can be changed if the bond has a call provision a put provision or a conversion provision an example of term to maturitythe walt disney company raised 7 billion by selling bonds in september 2019 the company issued new bonds with six terms of maturity in short term medium term and long term versions the long term version was a 30 year bond that pays 0 95 more than the comparable treasury bonds 