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Loan and Mortgage Terms Glossary

Yield To Maturity:

The average annual yield of a fully amortized loan, that is held by an investor for the life of the loan. The average rate takes into the account the fact that the outstanding principal, and consequently the amount of interest, declines each year until the loan is fully paid. When the term is used in reference to a bond or other security, it means the average annual rate of return of the security when held to maturity, taking into account discounts or premiums paid when the security is purchased and capital gains or losses.

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