Weighted Average Life: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Classify page.) |
imported>Doug Williamson (Update - source - Association of Corporate Treasurers - email from Naresh Aggarwal 16 Feb 2022.) |
||
| Line 1: | Line 1: | ||
(WAL). | (WAL). | ||
Weighted Average Life | Weighted Average Life is used to measure credit risk. | ||
Although the terms WAFM and WAL are sometimes used interchangeably with respect to money market funds, the WAL is technically the weighted average of the times when principal is repaid. | |||
Instruments which repay principal over several years will have a shorter WAL than those which repay all of the principal at maturity. | |||
Weighted Average Life can be applied both to portfolios of investments and to single investments. | |||
== See also == | == See also == | ||
* [[Credit risk]] | |||
* [[Money market fund]] | * [[Money market fund]] | ||
* [[Principal]] | |||
* [[Weighted average maturity]] | * [[Weighted average maturity]] | ||
* [[Weighted Average Final Maturity]] (WAFM) | |||
[[Category:Accounting,_tax_and_regulation]] | [[Category:Accounting,_tax_and_regulation]] | ||
Revision as of 15:46, 16 February 2022
(WAL).
Weighted Average Life is used to measure credit risk.
Although the terms WAFM and WAL are sometimes used interchangeably with respect to money market funds, the WAL is technically the weighted average of the times when principal is repaid.
Instruments which repay principal over several years will have a shorter WAL than those which repay all of the principal at maturity.
Weighted Average Life can be applied both to portfolios of investments and to single investments.
