TAC bond


Short for Targeted Amortization Class bond, a mortgage-backed bond that may be offered in a collateralized mortgage obligation. A TAC bond is similar to a PAC bond, but differs in its structure and payment. A TAC bond is less stable, and protects against a rise in the prepayment rate, but not against a fall in the prepayment rate. It schedule will be met only at one given prepayment rate.
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