What Is Maturity Value?

The final value of the bond is the symmetry of the "present value of the bond", also known as "future value" and "maturity value". The present value (purchase price) of a certain bond is the sum of principal and interest calculated on the maturity date based on compound interest. There are two methods for calculating the final value of bonds: According to the nominal value, the coupon rate and the repayment period are directly calculated. Let P be the present value of the bond, n be the maturity period, i be the annual interest rate, and D be the final value of the bond, then D = P (1 + i) n. For example, if a bond has a maturity of 5 years, an annual interest rate of 5% and a face value of 1,000 yuan, the sum of the principal and interest due (ie the final value of the bond) is 1000 × (1 + 5%) 5 = 1276. 3 yuan. Calculated indirectly based on the present value of bonds and the maturity period. For example, if the present value of the above bond is held for 2 years and it is RMB 112.5, and the unexpired period is 3 years, then the sum of the principal and interest due for repayment will be RMB 102.5 (1 + 5%) 3 = 1276. . 3 yuan. The difference between the final value of the bond and the present value of the bond is the investment benefit during the period of holding the bond. The longer you hold a claim, the greater the difference between the bond's final value and the bond's present value, and therefore the greater the return. ^[1]

Bond final value

Right!

The final value of the bond is the symmetry of the "present value of the bond", also known as "future value" and "maturity value". The present value (purchase price) of a certain bond is the sum of principal and interest calculated on the maturity date based on compound interest. There are two methods for calculating the final value of bonds: According to the nominal value, the coupon rate and the repayment period are directly calculated. Let P be the present value of the bond, n be the maturity period, i be the annual interest rate, and D be the final value of the bond, then D = P (1 + i) n. For example, if a bond has a maturity of 5 years, an annual interest rate of 5% and a face value of 1,000 yuan, the sum of the principal and interest due (ie the final value of the bond) is 1000 × (1 + 5%) 5 = 1276. 3 yuan. Calculated indirectly based on the present value of bonds and the maturity period. For example, if the present value of the above bond is held for 2 years and it is RMB 112.5, and the unexpired period is 3 years, then the sum of the principal and interest due for repayment will be RMB 102.5 (1 + 5%) 3 = 1276. . 3 yuan. The difference between the final value of the bond and the present value of the bond is the investment benefit during the period of holding the bond. The longer you hold a claim, the greater the difference between the bond's final value and the bond's present value, and therefore the greater the return. ^[1]

There are two ways to calculate the final value of a bond:

Based on the face value, the coupon rate and repayment period are directly calculated. Let P be the present value of the bond, n be the maturity period, i be the annual interest rate, and D be the final value of the bond, then D = P (1 + i) 2. For example, if a bond has a maturity of 5 years, an annual interest rate of 5%, and a face value of 1,000 yuan, the sum of the principal and interest due (that is, the final value of the bond) is 1000 × (1 + 5%) 5 = 1276.

Calculated indirectly based on the present value of bonds and the maturity period. For example, if the present value of the above bond is held at 21.02.5 yuan and the unexpired period is 3 years, the sum of the principal and interest due at maturity will be: 102.5 × (1 + 5%) 3 = 1276 .3 yuan. The difference between the final value of the bond and the present value of the bond is the investment benefit during the period of holding the bond. The longer you hold a claim, the greater the difference between the bond's final value and the bond's present value, and therefore the greater the return.

Bond present value

1 Li Weimin, editor. Dictionary of Finance 3. Heilongjiang People's Publishing House, 2002.11.

2 Cao Xiang. 200 cases of financial legal liability. Reform Press, January 1996, 1st edition. ^[2]