Features of Debt Instruments (Maturity, Par value, Coupon rate): Maturity: A debt instrument's maturity refers to the designated date on which the prin...
Maturity:
A debt instrument's maturity refers to the designated date on which the principal is repaid to the investor.
It's like the due date on a loan.
Different debt instruments have different maturities, ranging from short-term to long-term.
Par Value:
The par value is the initial amount of the debt issued.
It's the price that the investor pays for the bond.
It remains the same throughout the life of the bond.
Coupon Rate:
The coupon rate is the interest rate paid by the issuer to the investor over a specific period.
It's expressed as a fixed annual percentage.
The coupon rate can be higher or lower than the market interest rate, depending on the risk profile of the bond