Lag Payment of a financial obligation later than is expected or required, as in lead and lag. Also, the number of periods that an independent variable in a regression model is "held back" in order to predict the dependent variable. Lag response of prepayments There is typically a lag of about three months between the time the weighted average coupon of an MBS pool has crossed the threshold for refinancing and an acceleration in prepayment speed is observed. Lambda The ratio of a change in the option price to a small change in the option volatility. It is the partial derivative of.