targeted amortization class

Definition

A type of collateralized mortgage obligation intended to protect investors from prepayment risk. A targeted amortization class (TAC) bond establishes a fixed repayment schedule. If a borrower prepays the underlying mortgage, the life of the bond is shortened but the interest rate is not changed.
Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
targeted accrual redemption note (TARN) targeted amortization class bond