Weighted-average Life
The number weighted average of the times of the principal repayments of an amortizing loan is referred to as the weighted-average life (WAL), also called "average life". It's the average time until a dollar of principal is repaid.
In a formula,
where:
- is the principal,
- is the principal repayment in coupon, hence
- is the fraction of the principal repaid in coupon, and
- is the time from the start to coupon .
Read more about this topic: Amortizing Loan
Famous quotes containing the word life:
“Everything one does in life, even love, occurs in an express train racing toward death. To smoke opium is to get out of the train while it is still moving. It is to concern oneself with something other than life or death.”
—Jean Cocteau (1889–1963)