WAL meaning in Maths ?

What is Weighted Average Life mean?

In finance, the weighted-average life (WAL) of an amortizing loan or amortizing bond, also called average life, is the weighted average of the times of the principal repayments: it's the average time until a dollar of principal is repaid.

In a formula,

WAL = ∑ i = 1 n P i P t i , {\displaystyle {\text{WAL}}=\sum _{i=1}^{n}{\frac {P_{i}}{P}}t_{i},}

where:

P {\displaystyle P} is the (total) principal, P i {\displaystyle P_{i}} is the principal repayment that is included in payment i {\displaystyle i} , hence P i P {\displaystyle {\frac {P_{i}}{P}}} is the fraction of the total principal that is included in payment i {\displaystyle i} , and t i {\displaystyle t_{i}} is the time (in years) from the calculation date to payment i {\displaystyle i} .

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