Explain the yield maintenance requirement

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React: From a borrower's perspective, a 3-year floating rate mortgage with no amortization, a 4.5% interest rate, a 50-basis point closing fee, and no prepayment penalty is a better loan than a 10-year loan with a fixed 6.0% interest rate, a 20-year amortization schedule, a 75 basis point closing fee, and a yield maintenance requirement.

Reference no: EM133114527

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