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Tag: yield-maintenance

A borrower and lender on a see-saw, illustrating the balance between prepayment risk and yield maintenance premiums.

Understanding Yield Maintenance: A Prepayment Penalty for Institutional Investors

October 14, 2025 FinanceFacts101 Business Finance

Introduction: Yield Maintenance as a Compensation for Prepayment Risk Yield maintenance is an essential concept for institutional investors to understand in the world of finance and investment. This section delves into yield maintenance, explaining its role as a compensation mechanism for lenders who face prepayment risk. Prepayment risk refers to

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