Talk:Weighted-average life

I was thinking of contributing different material to this page, but it's too complicated for my old fashioned brain, so I gave up for lack of time. The reason for this is that some of the material found presently is confusing while other, such as the relationship to duration, is plainly incorrect. Duration is a local concept while average life is a global concept. The two could not be more different from each other than they already are. Duration does not attempt to measure the average maturity of a stream of cash payments, but the sensitivity of bond prices to interest rates. The fact that their respective formulas are somewhat similar is not related to the intent behind them. In many cases, they are, in fact, quite different.

In adddition, the current article lacks analytical depth although it is pitched at the level Wall Street can easily grasp. The way the subject matter is presented, it is not possible to learn anything about either average life or duration. For instance, and contrary to what is stated herein, "weighted-average life" and "average life" are not two ways of talking about the same concept. Since the expression "average" already contains the idea of a weighting function, at first blush the expression "weighted-average life" sounds something like "wet water" or "aerial flight". Therefore, "weighted-average life" must refer to something else, something not already contained in the idea of average life tout court. That something is what is missing in this article to let people learn how to conceive of both in practice. The duration innuendo can be left out since, in my view, this article should address a single topic.