Term (redirected from term of years)

Term

The period of time during which a contract is in force.

---

term

1. The period during which a bond will remain outstanding.

2. The length of time that a person is to serve in a usually official capacity. For example, a firm's directors may be elected for terms of three years each.

---

Term. A term is the length of time between when a fixed-income security, such as a bond or note, is offered for sale and its maturity date.

When the term ends, the issuer repays the par value of the security, often along with the final interest payment. In general, the longer the term, the higher the rate of interest the investment pays, to offset the increased risk of tying up your money for a longer period of time.

Term is also the lifespan of a certificate of deposit (CD), called a time deposit. If you hold a CD for the entire term, which may run from six months to five years, you collect the full amount of interest the CD has paid during the term and are free to roll the principal into a new CD or use the money for something else.