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12-Month Treasury Average (MTA)
| The Monthly Treasury
Average is a relatively new ARM index. This index is the 12 month
average of the monthly average yields of U.S. Treasury securities
adjusted to a constant maturity of one year. It is calculated by
averaging the previous 12 monthly values of the 1-Year
CMT. Because this index is an annual average,
it is more steady than the 1-Year CMT index. The MTA index generally
fluctuates slightly more than the 11th District
COFI, although its movements track each other very closely (as
illustrated on our historical graph).
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MTA vs. 1-Yr CMT, 11th District COFI, 1994-2004
| The MTA and COFI-indexed ARMs work
much the same way. ARMs tied to the MTA index may have the potential
for negative amortization (like those tied to the 11th District COFI).
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