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In finance, the weighted-average life of an amortizing loan or amortizing bond, also called average life, is the weighted average of the times of the principal repayments: it's the average time until a dollar of principal is repaid.
In a formula,
where:
If desired, t i {\displaystyle t_{i}} can be expanded as 1 12 {\displaystyle {\frac {1}{12}}} for a monthly bond, where α {\displaystyle \alpha } is the fraction of a month between settlement date and first cash flow date.
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