Planned amortization class CMO

(1) One class of CMO that carries the most stable cash flows and the lowest prepayement risk of any class of CMO. Because of that stable cash flow, it is considered the least risky CMO. (2) A CMO bond class that stipulates cash-flow contributions to a sinking fund. With the PAC, principal payments are directed to the sinking fund on a priority basis in accordance with a predetermined payment schedule, with prior claim to the cash flows before other CMO classes. Similarly, cash flows received by the trust in excess of the sinking fund requirement are also allocated to other bond classes. The prepayment experience of the PAC is therefore very stable over a wide range of prepayment experience. The New York Times Financial Glossary

Financial and business terms. 2012.

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  • planned amortization class — ( PAC) (1) The class of CMO that has the most stable cash flows and the lowest prepayment risk of any class of CMO. Because of a stable cash flow, it is considered the least risky CMO. (2) A CMO bond class that stipulates cash flow contributions… …   Financial and business terms

  • targeted amortization class (TAC) tranche — Bonds created in scheduled pay CMO structures. A TAC tranche is structured to avoid prepayment volatility. Each TAC has a designated target speed. When prepayments exceed the targeted speed, the excess cash flow is diverted to other tranches in… …   Financial and business terms

  • targeted amortization class tranche — targeted amortization class (TAC) tranche Bonds created in scheduled pay CMO structures. A TAC tranche is structured to avoid prepayment volatility. Each TAC has a designated target speed. When prepayments exceed the targeted speed, the excess… …   Financial and business terms

  • Targeted Amortization Class - TAC — A type of credit derivative that is similar to a planned amortization class (PAC) in that it protects investors from prepayment; however, it is structured differently than a PAC. TACs protect investors from a rise in the prepayment rate or a fall …   Investment dictionary

  • (CMO): облигация, обеспеченная пулом ипотек — Обеспеченные ипотечным залогом облигации делят пул ипотечных займов на различные по срокам погашения части, которые называются траншами (tranches). Такое деление достигается путем использования дохода (платежей и предварительных выплат в счет… …   Финансово-инвестиционный толковый словарь

  • Collateralized mortgage obligation — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • real estate mortgage investment conduit — ( REMIC) The name of a type of mortgage backed pass through security. REMICs can take many forms. REMICs are typically multiclass securities. Unlike simple, non REMIC CMOs, REMICs can separate mortgage pools into different risk classes as well as …   Financial and business terms

  • REMIC — real estate mortgage investment conduit (REMIC) The name of a type of mortgage backed pass through security. REMICs can take many forms. REMICs are typically multiclass securities. Unlike simple, non REMIC CMOs, REMICs can separate mortgage pools …   Financial and business terms

  • TAC tranche — targeted amortization class (TAC) tranche Bonds created in scheduled pay CMO structures. A TAC tranche is structured to avoid prepayment volatility. Each TAC has a designated target speed. When prepayments exceed the targeted speed, the excess… …   Financial and business terms

  • Companion Tranche — A class of tranche found in planned amortization class (PAC) and targeted amortization class (TAC) collateralized mortgage obligations (CMOs) that absorbs variable prepayment rates. The companion trache is so named because it is designed to… …   Investment dictionary

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