What defines a term bond?

A term bond is specifically defined as a bond that matures on a single date. This means that the entire principal amount of the bond is paid back to the bondholders at a specified maturity date, along with any accrued interest. This structure is typically favored by investors who prefer a clear timeline for when they will receive their investment back, accompanied by fixed interest payments throughout the bond's life.

In contrast, bonds that mature in installments are referred to as serial bonds, where portions of the bond's principal are repaid at different intervals. Additionally, the characteristic of being convertible into stock applies to convertible bonds, which allow bondholders the option to exchange their bonds for equity in the issuing company, offering a potential upside if the company performs well. The notion of a bond that cannot be refinanced does not define a specific type of bond and is more about the terms of the bond agreement rather than the nature of the bond itself. Thus, recognizing that a term bond has a clear single maturity date is crucial in understanding its definition and distinguishing it from other types of bonds.