The number of years to the point at which half of the Principal of the Bond Issue will have been retired, which in turn gives an indication as to how fast the Principal is expected to amortize. Generally, the Average Life is equal to (a) the product of the number of Bonds times the number of years from issuance to Maturity divided by (b) the total number of Bonds; for these purposes, a “Bond” is each $1,000 Par amount, regardless of actual denomination. This term is often used in connection with the Underwriter’s calculations.
In Contrast With
Generally, the weighted average maturity of a bond issue is the sum of the product of the issue price of each maturity of the bond issue multiplied by the number of years from the closing until that maturity date divided by the issue price of the entire bond issue.
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Term of the Week
Law designed to ensure that investors are provided with material information about new issues of securities offered for sale to the public.