How to Compute the Time to Maturity for a Bond

You should know the expiration date and time to maturity of your bonds.

You should know the expiration date and time to maturity of your bonds.

While stocks, foreign currencies or some investment commodities like gold come with no expiration dates, bonds expire on specific dates. It's crucial to know when the bonds in your portfolio expire and how much time you have left until the expiration date. When a bond expires, the bond's issuer will pay you cash. If you suddenly find out that a bond in your portfolio has expired, you may have to keep its cash proceeds in a bank while you investigate suitable investment alternatives. Bank deposits earn a comparatively low interest rate. Therefore, the less time your money spends in a bank, the higher your overall investment return tends to be.

Determine the bond's expiration date. The expiration date is when you will return the bond to the issuing entity -- which can be a corporation, municipality, foreign government or the federal government -- to receive the original issue price of the bond. Once the bondholder submits the bond to the issuer on the expiration date, the bond will cease to exist. If the bond was issued by a corporation, you can find the expiration date by contacting the issuing company's investor relations department. For government bonds, you can consult a finance portal, such as Yahoo! Finance or Google Finance.

Find the number of days remaining until the bond's expiration date. The easiest way to do so is to use a spreadsheet software such as Microsoft Excel. Enter the bond's expiration date in one cell and today's date in another. Then, in a third cell, subtract the two dates from each other. You must type an equal sign, followed by the name of the cell containing the expiration date, followed by a minus sign, followed by the name of the cell containing today's date. If for example, you typed today's date in C12 ad the expiration date in C13, the formula will read: "= C13-C12"

Divide the number of days between today and the expiration date by 365. The result is the time to maturity, expressed in years. If, for example, today's date is January 1, 2013, and the expiration date is August 15, 2021, there are 3,148 days remaining until the maturity date. Dividing 3,148 by 365 results in 8.62 years.


About the Author

Hunkar Ozyasar is the former high-yield bond strategist for Deutsche Bank. He has been quoted in publications including "Financial Times" and the "Wall Street Journal." His book, "When Time Management Fails," is published in 12 countries while Ozyasar’s finance articles are featured on Nikkei, Japan’s premier financial news service. He holds a Master of Business Administration from Kellogg Graduate School.

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