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To help pay for university, you have just taken out a $ 1 0 0 0 government loan that makes you pay $ 1 5
To help pay for university, you have just taken out a $ government loan that makes you pay $ per year for years. However, you don't have to start making these payments until you graduate from university three years from now. Why is the yield to maturity necessarily less than This is the yield to maturity on a normal $ fixedpayment loan on which you pay $ per year for years.
If your loan $ per year for years starting three years from now had the same yield to maturity as a normal fixedpayment loan with payments of $ per year for years, then the present value of each $ payment on your loan would be the present value of each corresponding $ payment on the normal fixedpayment loan, and therefore today's value of your loan would be today's value of the normal fixedpayment loan. For today's value of your loan to be the same as today's value of the normal fixedpayment loan, the present values of your yearly payments must For that to happen, the yield to maturity on your loan must since yield to maturity is the present values of your payments.
Options for st and nd blank: equal to less than or greater than
Options for rd and th blank: increase or decrease
Options for th blank: subtracted from, added to in the numerators of in the denominators of
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