In general, it refers to the weighted average of the coupon payable on the liabilities of an issuer (debt issuer).
In the context of mortgage pass-through securities (mortgage pass thrus), it refers to the interest payments of the underlying mortgages belonging to a given pool, calculated as a weighted average, i.e., the average coupon of the pool taking into consideration the size of each position with respect to the entire pool (the original principal amount of the mortgages), as of the pool issue date. The weighting factor is the balance of each mortgage in the pool.
The weighted average coupon may be calculated on a gross basis (gross WAC) or a net basis (net WAC).
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