Constant Maturity
Used by the Federal Reserve Board to quote the yields on various treasury securities, adjusted to an equivalent maturity. Investopedia Says:
By providing the constant maturity yields, the Fed allows investors to compare against securities with the same maturity date (such as corporate bonds).
Constant maturity yields are often used by lenders to determine mortgage rates. For example, the 1 year constant maturity rate might be 4%, while the lender charges 5% to borrowers for a 1 year loan. The 1% difference is the lender's profit margin. Related Terms:
Federal Reserve Board
Maturity Date
T-Bill
Yield |