Average Life
Number of years to the point at which half of the principal of the bond will have been retired, which in turn gives an indication as to how fast the principal is expected to amortize.
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Weighted Average Maturity
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. The Weighted Average Maturity of a Tax-Exempt Bond Issue is important for a number of purposes under the Code and Treasury Regulations (see the “120% Rule”) and must be reported to the Internal Revenue Service (IRS) on the applicable Form 8038.
See Also
Start with the Bond Basics
Hundreds of Terms and Concepts
Form 8038 (IRS)
Form required to establish and maintain the federal income tax-exempt status of the interest on tax-exempt bonds. Known as Form 8038-G for governmental bonds.