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PO

Principal Only

Describing a derivative in which the underlying assets are the future principal payments on a pool of mortgages or other debt obligations. Principal-only derivatives are issued at a deep discount to their par value; that is, one buys such derivatives for an amount less than the principal payments to which the holder is entitled. The gain on a principal-only derivative comes from the amount by which principal payments exceed the amount that the holder pays for the security. For that reason, holders of these derivatives can benefit from prepayment risk because when property owners repay their mortgages more quickly, principal-only derivative holders receive their returns more quickly.

PO

References in periodicals archive ?
A PO's duty to credential its physicians creates two potential areas of liability risk.
A PO's method or criteria for selecting participating providers may also raise antitrust concerns, i.
Finally, antitrust risks may also arise if a PO's conduct during implementation or operation is considered anticompetitive.