26-109 If the entire mortgage pool is repaid at the end of the second month,what is the weighted average life of the mortgage pool?
A)2.10 months.
B)2 months.
C)1.997 months.
D)1.95 months.
E)1.90 months.

Question

Quizplus · Accepted Answer

The weighted average life of a mortgage pool is calculated by taking the sum of the time each principal payment is outstanding, weighted by the amount of principal paid at each time. If the entire mortgage pool is repaid at the end of the second month, the weighted average life is slightly less than 2 months due to the time value of money, resulting in approximately 1.997 months.

26-109 If the Entire Mortgage Pool Is Repaid at the End