AVERAGE LIFE
The time span that the principal of a debt issue is assumed to be outstanding. This term is an normal period before a money owed is paid back by means of sinking fund payments or amortization. To compute the average life, multiply the date of every payment (connoted as a fraction of months or years) by the percentage of total principal that has been paid by that time, totalling the results and dividing by the overall issue size.
"Weighted Average Life" or "Weighted Average Maturity" are other terms used to characterize Average Life.
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