wam = weighted average maturity whats the difference between wam and weighted average life. thx
WAM is an average across several loans, and applied to pools of mortgages while WAL is an average of a single amortizing loan or amortizing bond
There is an equation in CFAI for that - do we need to know how to calc WAM, WAL?
so can i say WAM is broad catalog and WAL is inside WAM?
idreesz Wrote: ------------------------------------------------------- > WAM is an average across several loans, and > applied to pools of mortgages > > while > > WAL is an average of a single amortizing loan or > amortizing bond Sorry but I still don’t understand. There’s an EOC question on this at page 425, here the security B has an average life of 11.5 years and WAM of 136 months, I understand the WAM but what is the underlying meaning behind the 11.5 years, how to calculate that? Thanks!
im not sure here but i believe life refers to when a mortgage should complete payments, and maturity is when the mortgage is assumed to finish based on prepayment rates.
Other way around Kurupt1. WAM is based on the actual maturity dates of the loans WAL is based upon the time that both scheduled and unscheduled principal payments are made
kurupt1 Wrote: ------------------------------------------------------- > im not sure here but i believe life refers to when > a mortgage should complete payments, and maturity > is when the mortgage is assumed to finish based on > prepayment rates. You have it backwards. Maturity is the stated maturity of the loan and the life is based on prepayments.