Federal Home Loan Mortgage Corporation - Page 49

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          interests, and stock options of privately and publicly held                 
          companies.                                                                  
               Mr. Scribner determined that the estimated useful lives of             
          the favorable financing intangible assets equal the average                 
          weighted lives of the debt obligations that give rise to them.              
          According to Mr. Scribner, the estimated useful lives of the                
          favorable financing intangible assets did not change on account             
          of subsequent unforeseen events because                                     
               the interactions of market participants force the                      
               incorporation of all known and expected information                    
               available at that date into the existing prevailing                    
               market interest rate.  Therefore, the market consensus                 
               establishes the current market interest rate to be the                 
               best estimate of the prevailing interest rate over the                 
               life of the investment.                                                
               Mr. Scribner states that the average weighted life                     
          represents the time it takes for the average dollar of principal            
          borrowed to be repaid to the lender.  The average weighted life             
          is calculated by:  (1) Multiplying the principal payment by the             
          number of years or pro rata portion of a year that the principal            
          amount has been outstanding, (2) adding the results for all                 
          payment periods, and (3) dividing that sum by the total principal           
          paid.20  For debt obligations that do not repay any principal               

               20 The average weighted life formula is as follows:                    
                              AWL =     E PMT x n                                     
                                             P                                        
          PMT is the principal payment, n is the number of years that the             
          principal amount has been outstanding, and P is the total                   
                                                             (continued...)           




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Last modified: May 25, 2011