What is the impact of the maturity date on the bond's yield?

The maturity date of a bond can have an impact on its yield, primarily through the concept of yield to maturity (YTM). Yield to maturity is the total return an investor can expect to earn if the bond is held until its maturity date, assuming all coupon payments are reinvested at the same yield.

When a bond approaches its maturity date, the YTM becomes a more relevant measure of the bond's yield. As the bond gets closer to maturity, the YTM converges with the bond's coupon rate (the fixed interest rate specified at issuance). This convergence occurs because, as the bond nears maturity, there is less time for reinvestment of coupon payments, and the impact of any premium or discount on the bond's price diminishes.

In summary, as a bond approaches its maturity date, its yield to maturity tends to align with the bond's coupon rate. This convergence reflects the fact that the bond's remaining cash flows become more certain and the reinvestment risk decreases. However, it's important to note that the relationship between maturity date and yield can also be influenced by other factors, such as changes in interest rates, credit quality, and market conditions.