Constant Maturity

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Dictionary Says

Definition of 'Constant Maturity'

Used by the Federal Reserve Board to quote the yields on various treasury securities, adjusted to an equivalent maturity.
Investopedia Says

Investopedia explains 'Constant Maturity'

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 Definitions

  • Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members of the board of governors are appointed by the president, subject to confirmation by the Senate.
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  • Maturity Date

    The date on which the principal amount of a note, draft, acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop. It is also the ...
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  • Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and ...
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    • Yield

      The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost, ...
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