Also referred to as the weighted-average life (WAL). The average number of years that each dollar of unpaid principal due on the mortgage remains outstanding. Average life is computed as the weighted average time to the receipt of all future cash flows, using as the weights the dollar amounts of the principal paydowns.
Average time that a dollar of principal is outstanding. This measure tells an investor how long a security will remain outstanding on average. For bonds that amortize principal (make periodic principal payment) this is an important measure.
The average time which the principal amount on a loan remains outstanding. The average life on a bullet bond is equal to its maturity, whereas on a bond with a Sinking Fund feature, the average life will be shorter.
On a mortgage security, the average time to receive each dollar of principal, weighted by the amount of each principal payment, based on prepayment assumptions.
normally expected duration of an asset capitalization threshold a dollar amount, established by the entity. Assets with an original cost in excess of threshold are capitalized while those assets with an original cost below the threshold are not reported as fixed assets
Mortgage-backed securities return principal to the investor over a period of time rather than on one specific maturity date. The return of principal is therefore referred to as the average life, which is the weighted average time to receipt of principal. In most cases, the average life, approximately 50% of the principal will have been returned.
The weighted-average time (in years) the principal of a mortgage security is outstanding. An increase in prepayments of the underlying mortgage loans shortens the average life of a mortgage security since more principal has been repaid and a smaller amount of principal will be paid in the future.
The weighted average time for the return of principal, where the weights are the principal payments for each period.
The weighted average retirement date of a bond or block of bonds; the average amount of time each pound of principal amount will be outstanding. Average life is computed by multiplying each principal repayment by the time of payment (months or years from the evaluation date), summing these products, and dividing the sum by the total amount of principal repaid.
The arithmetic weighted average life of a bond where the weights are the proportion of the principal amount being redeemed.
The weighted average maturity date of a portfolio of bonds.
a way to look at the term of a loan or bond that accounts for principle paydowns. If a loan is interest with a full balloon the average life would equal the maturity. If there is amortization, principle is being paid off over the life of the loan, decreasing the balloon payment and the average life. This number is then used to find the treasury that the closest remaining term, without going over.
Average length of time of a principle amount of a transaction to be repaid through amortization payments. Hence, for example, a transaction that has 6 equal semi – annual maturities will have an average life of (6+12+18+24+30+36)/6= 21 months or 1.75 years.
The average length of time that a bond issue with a mandatory sinking fund is expected to be outstanding.
A measure of how long it takes, on average, for a security to repay its principal. For a Treasury note, no principal is repaid until maturity, so the average life equals the term to maturity. A sinking-fund bond or a mortgage pool, on the other hand, pays down principal at various times in its life, and in this case, average life may be significantly different from the time to final maturity.
The estimate of maturity for a pool of mortgage-backed securities.
This is the average period (expressed in years) at the end of which the investor will receive the monies to which the bond entitles him. The idea of average life takes account of the dates on which the different incomes are received (e.g. coupons) as opposed to the residual life of a bond. The average life of a portfolio corresponds to the average weighted duration of each of the stocks held.
The average amount of time that will elapse from the date of an MBS purchase until the principal is repaid based on an assumed prepayment forecast. Alternatively, average life is the average amount of time a dollar of principal is invested in an MBS pool.
It is a way to look at the term of a loan or bond that accounts for principal pay downs. If a loan is interest only with a full balloon at the end, the average life will equal the maturity. If there is amortization, principal is being paid over the life of the loan, decreasing the balloon payment and the average life. This number is then used to find the treasury that has the closest remaining term, but is not shorter. For example, a 10/25 loan has an average life of 9 years. 9 years from today is October 2008. The current list of outstanding, non-callable US treasury securities with maturities in 2008 includes March 2008, June 2008, September 2008 and a December 2008. The lender would choose the December 2008 because it is longer than the actual due date.
An estimate of the number of terms to maturity, taking the possibility of early payments into account. Average life is calculated using the weighted average time to the receipt of all future cash flows, using the weights the dollar amounts of the principal paid each period.
The sum of the amounts outstanding of the loan at the end of each year, throughout its entire life, divided by the total principal sum borrowed. It gives the average life of the loan in years. Français: Vie moyenne Español: Vida media
The average length of time anticipated that a bond, with a mandatory sinking fund, will be outstanding. See: Yield To Average Life
The average length of time an issue of serial bonds and/or term bonds with mandatory sinking funds and/or estimated prepayments is expected to be outstanding. It also can be the average maturity of a bond portfolio.
Generally, the average useful life of an asset for tax or accounting purposes
Accreting Swap Adjustment bond