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how to calculate a weighted average life. Redirected from Weighted-Average Life In finance the weighted-average life WAL of an amortizing loan or amortizing bond also called average life is the weighted average of the times of the principal repayments. The WAM can be calculated by determining the weight of each maturity in the average multiplying that weight by the securitys maturity and summing the weighted maturities.
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The WAL specifies the amount of time it will take to recover one-half of the bonds face value. Weighted average 010 45 015 50 025 65 050 95. Weighted average 215 x 100 205 x 150 195 x 50300 2067.
Exam 1 20 Exam 2 20 Exam 3 20 Total Canvas Quizzes 20 Total Homework Assignments on MT 20 Total 100 The grading scale is as follows.
Its the average time until a dollar of principal is repaid. You only calculate the average when the values in the data set count equally. To calculate the average life multiply the date of each payment expressed as a. The following formula will calculate the average life for this particular bond.
