# How do you calculate WAM and WAC?

## How do you calculate WAM and WAC?

In the weighted average calculation, the principal balance of each underlying mortgage is used as the weighting factor. To calculate the WAC, the coupon rate of each mortgage or MBS is multiplied by its remaining principal balance. The results are added together, and the sum total is divided by the remaining balance.

What is WAC stock?

In accounting, the Weighted Average Cost (WAC) method of inventory valuation uses a weighted average to determine the amount that goes into COGS. The weighted average cost method divides the cost of goods available for sale by the number of units available for sale.

### What are the WAC and WAM of a pass through security?

The weighted-average maturity (WAM) and weighted average coupon (WAC) are used for valuation of a pass-through MBS, and they form the basis for computing cash flows from that mortgage pass-through.

How to calculate “blended average” for interest rates?

How to Calculate Blended Interest Rates When to Blend Interest Rates. Imagine that you have multiple credit card balances and want to figure out the overall rate you’re paying on your credit cards or you have Calculating Blended Interest Rates. Working With Additional Loans. Changing Interest Rates and Principals.

## How do you calculate the effective interest method?

The effective interest rate is calculated through a simple formula: r = (1 + i/n)^n – 1. In this formula, r represents the effective interest rate, i represents the stated interest rate, and n represents the number of compounding periods per year.

How to calculate weighted averages for loan maturity?

Determine the Balance. Find out the outstanding principal balance and number of months until maturity of each loan in the security from your broker or the security’s issuer.

• Add the Relevant Balances. Add the loan balances to determine the total balance of the pool of loans.
• Determine Months to Maturity.
• Other Critical Considerations.
• ### How to calculate the interest per annum on a monthly basis?

Convert the annual rate from a percent to a decimal by dividing by 100: 10/100 = 0.10 Now divide that number by 12 to get the monthly interest rate in decimal form: 0.10/12 = 0.0083 To calculate the monthly interest on \$2,000, multiply that number by the total amount: 0.0083 x \$2,000 = \$16.60 per month