easy · Asset-Backed Securities asset-nuances

For a seasoned auto ABS pool, how does the exercise of a 10% clean-up call impact the Weighted Average Life (WAL) of the remaining tranches?

1. It converts the WAL from a principal measure into an interest measure.
2. It extends the WAL because the final payment is delayed.
3. It shortens the WAL by accelerating the final principal repayment.
4. It has no effect because the principal was already mostly paid down.

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