tenor in finance

In finance, "tenor" refers to the length of time until a financial contract, such as a loan or bond, matures or expires. It indicates the duration for which the funds are borrowed or invested. For instance, a loan with a tenor of five years means that the borrower will repay the loan over five years. Tenor is essential because it affects the interest rates and risk associated with the investment or lending. Generally, longer tenors may carry higher risks and potentially higher yields, while shorter tenors tend to be less risky and have lower yields.