Investments glossary

Weighted Average Life (WAL)

The weighted average life (WAL) is the average length of time that each dollar of unpaid principal on a loan, a mortgage, or an amortizing bond remains outstanding. Calculating WAL shows an investor, an analyst, or a portfolio manager how many years it will take to receive roughly half of the amount of the outstanding principal. The formula is useful in measuring the credit risk associated with fixed-income securities.

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