# Glossary

## Acronyms

- **APR** – Annual Percentage Rate, an annualised measure of borrowing cost expressed as a percentage of principal.
- **CDF** – Cumulative Distribution Function, the probability that a random variable takes a value less than or equal to a given point.
- **DSCR** – Debt-Service Coverage Ratio, the quotient of operating income divided by debt service obligations.
- **IRR** – Internal Rate of Return, the discount rate that makes a series of cash flows have zero net present value.
- **KS** – Kolmogorov–Smirnov statistic, a non-parametric test metric measuring the maximum distance between empirical and theoretical distributions.
- **LGD** – Loss Given Default, the share of exposure that is not recovered when a borrower defaults.
- **MACRS** – Modified Accelerated Cost Recovery System, a tax depreciation regime prescribing accelerated write-off schedules.
- **NPV** – Net Present Value, the sum of cash flows discounted back to today’s value.
- **PSA** – Public Securities Association prepayment model, a benchmark curve describing the speed of mortgage prepayments.
- **RNG** – Random Number Generator, an algorithm or device that produces a sequence of random or pseudo-random values.
- **WAL** – Weighted Average Life, the average time until principal is repaid weighted by the amount of principal outstanding.