What Is Defined as the Sum of the Products of the Time

question 94

Multiple Choice

What is defined as the sum of the products of the time when principal payments are received and the amount of principal received all divided by total principal outstanding?

• A)Weighted-average life.
• B)Burn-out factor.
• C)Degree of collateralization.
• D)Option-adjusted spread.
• E)Time to maturity.

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Definitions:

Interest Rate

The percentage of a loan amount charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage.

Miller-Orr Model

A financial model used for managing cash flows and cash reserves, focusing on maintaining balances within certain limits at minimum cost.

Upper Limit

The maximum value or level that is allowed or attainable in a given situation.

Miller-Orr Model

A financial model used to manage cash balances by setting upper and lower limits on cash reserves within which no financing is needed.