Redemption (banking)

In banking, redemption refers to the process of repaying or recovering the value of a financial instrument, such as bonds, mutual funds, or certificates of deposit, before or at maturity. When an investor redeems an investment, they essentially cash out or withdraw their capital, receiving the principal amount plus any accrued interest or returns. This process allows investors to access their funds when needed, often before the original investment term ends. Redemption is a common feature that provides flexibility and liquidity, enabling investors to manage their financial needs or adjust their investment strategies.