To help pay for university, you have just taken out a $1000 government loan that makes you pay $158 per year for 20 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 15%? (This is the yield to maturity on a normal $1000 fixed-payment loan on which you pay $158 per year for 20 years.) If your loan ($158 per year for 20 years starting three years from now) had the same yield to maturity as a normal fixed-payment loan with payments of $158 per year for 20 years, then the present value of each $158 payment on your loan would be greater than the present value of each corresponding $158 payment on the normal fixed-payment loan, and therefore today's value of your loan would be greater than today's value of the normal fixed-payment loan. For today's value of your loan to be the same as today's value of the normal fixed-payment loan, the present values of your yearly payments must decrease. For that to happen, the yield to maturity on your loan must decrease, since yield to maturity is subtracted from the present values of your payments.