Meaning 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 to a sinking fund. A PAC directs principal payments 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
More terms such as Planned amortization class (PAC) in Dictionary P.
- Definition Pure Discount Bond:
- Examples A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or a single-payment bond planned amortization class (pac) definition.
- Definition Payer:
- Examples The person making a payment to a payee planned amortization class (pac) explain.
- Definition Put Price:
- Examples The price at which an asset will be sold if a put option is exercised. Also called the strike or exercise price of a put option planned amortization class (pac) what is.
- Definition Paid Up:
- Examples When all payments that are due have been made planned amortization class (pac) meaning.
- Definition Principal-Only (PO):
- Examples security (MBS) whose holder receives only principal cash flows on the underlying mortgage pool. All the principal distribution due from the underlying collateral pool is paid to the registered holder planned amortization class (pac) abbreviation.
