For an amortization asset, the amortization is based on the:
A) Gross weighted average coupon.
B) Straight coupon rate.
C) Weighted average maturity.
D) a and c only.
E) None of the above.

Question

Quizplus · Accepted Answer

The amortization of an amortization asset is based on both the gross weighted average coupon and the weighted average maturity. The gross weighted average coupon is the average coupon rate of the asset, weighted by the present value of each coupon payment. The weighted average maturity is the average time until each coupon payment is received, weighted by the present value of each coupon payment.

For an Amortization Asset, the Amortization Is Based on The