In the example the weighted total equals 100 x 1 400 x 2 300 x 3 200 x 4 or 2600 dollar-years. This means that on average the loans in the MBS have 22129 months until they mature. The weighted average is 828.
To compute WAM each of the percentages is multiplied by the years until maturity so the investor can use this formula.
Year 5 5 x 2000 10000. SUMPRODUCTC3C11D3D11SUMD3D11 Press Enter after typing the formula to view the weighted average. To compute WAM each of the percentages is multiplied by the years until maturity so the investor can use this formula. Sum up the payback amounts to find the total amount the bond pays back.