FRM Financial Risk Manager Practice Test

Generally, a bond that matures in one-to-three years is referred to as a short-term bond. A medium-term bond generally matures in four-to-10 years, and a long-term bond matures in more than 10 years.

Key Takeaway: Whatever the duration of a bond, the bond issuer fulfills his debt obligation when the bond reaches its maturity date. At this time, the final interest payment and the original sum investors loaned (the principal) are paid.