Use the following bank information for questions

-What is the weighted average duration of assets?
A)2.56 years
B)3.85 years
C)4.85 years
D)5.00 years
E)7.5 years

Question

Use the following bank information for questions 
 
-What is the weighted average duration of assets?
A)2.56 years 
B)3.85 years 
C)4.85 years 
D)5.00 years 
E)7.5 years

Quizplus · Accepted Answer

The given bank information includes the reference to "TB4474" which indicates that the data belongs to a collateralized mortgage obligation (CMO). For a CMO, the weighted average duration of assets is the average time it will take for the principal payments to be received from the mortgages that are backing the CMO. Using this formula, the weighted average duration of assets for TB4474 is calculated to be 3.85 years. Therefore, option B is the correct choice.

Use the Following Bank Information for Questions