Legal Definitions - maturity value

Maturity value refers to the total amount of money that is due and payable on a specific future date, known as the maturity date, for a financial obligation or investment. This amount typically includes the original principal sum along with any accumulated interest or earnings. It represents the final payout an investor receives or the final payment a borrower must make when a financial instrument reaches the end of its term.

Here are some examples to illustrate this concept:

• Corporate Bond: Imagine a large company issues a bond with a face value of $1,000 and a maturity date of five years from now. Throughout those five years, the bondholder receives regular interest payments. When the five years are up, on the maturity date, the company repays the original $1,000 to the bondholder. This $1,000 is the maturity value of the bond, representing the return of the principal investment.
• Certificate of Deposit (CD): A person decides to invest $10,000 in a 2-year Certificate of Deposit (CD) at their bank, earning a fixed interest rate. They cannot withdraw the money without penalty until the 2-year term is complete. At the end of the two years, the bank pays the investor their original $10,000 deposit plus all the interest that has accumulated over that period. The total sum received by the investor (principal + interest) is the CD's maturity value.
• Promissory Note: A small business owner borrows $50,000 from a private lender, agreeing to repay the entire principal amount plus 8% simple interest in one lump sum after 18 months. On the agreed-upon repayment date (the maturity date), the business owner calculates the interest ($50,000 * 0.08 * 1.5 years = $6,000). The total amount they must pay back is $50,000 (principal) + $6,000 (interest) = $56,000. This $56,000 is the maturity value of the promissory note.