Question

Lifetime Value, in reference to one of your customers, is defined as:

a. How important the customer is to your business.
b. The total length of time a customer does business with your company.
c. The average amount of money a customer will spend with your business over the course of his or her life.
d. The value your company perceives each customer has.

Answer 1

c. The average amount of money a customer will spend with your business over the course of his or her life.

Lifetime Value (LTV) is defined as the average amount of money a customer spends with a business over their lifetime. For banks, the value of mortgage loans can be considered in this context, as those loans are sold in the secondary loan market.

Step-by-step explanation:

Lifetime Value (LTV) refers to the average amount of money a customer will spend with your business over the course of his or her life. It's a crucial metric for understanding how valuable a customer is to a company in financial terms.

For a bank, a mortgage loan, like a 30-year mortgage taken to purchase a house, represents an asset. Banks often sell these mortgage loans to other financial institutions, which is part of the secondary loan market.

The ability to measure the present value of an asset paid over a period of time like a 30-year mortgage is important in determining its worth on the market.