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TAC Bond |
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TAC Bond Targeted Amortization Class bond. A collateralized mortgage obligation that seeks to protect investors from prepayment risk. A targeted amortization class bond does this, like PACs, by setting a schedule of payments; if prepayments of the underlying mortgages exceed a certain rate, the life of the bond is shortened. Unlike PACs, however, if prepayments fall below a certain rate, the life of the tranche is not extended. Targeted amortization class bonds help protect investors in case the holders of the underlying mortgages do not pay their mortgages back as expected. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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