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Targeted Amortization Class (TAC)

Targeted Amortization Class (TAC)

What is 'Targeted Amortization Class - TAC'

A type of credit derivative that is similar to a planned amortization class (PAC) in that it protects investors from prepayment; however, it is structured differently than a PAC. TACs protect investors from a rise in the prepayment rate or a fall in interest rates. They do not protect from a fall in the prepayment rate like PACs.

Explaining 'Targeted Amortization Class - TAC'

The TAC is essentially a bond under a collateralized mortgage obligation (CMO). Under a TAC, the principal is paid on a predetermined schedule. Any prepayment that occurs is amortized in order to maintain the schedule. TACs are inferior to PACs because they only provide one-sided prepayment protection.


Targeted Amortization Class (tac) FAQ

What is planned amortization class?

A Planned Amortization Class (PAC) Tranche is a method of shielding financial investors in asset-backed securities from prepayment hazards. PAC tranches achieve this by utilizing a collar dependent on a scope of prepayment velocities to think of a consistent installment plan for advance.

Further Reading

TARGETED AMORTIZATION CLASS (TAC) BOND A TRANCHETARGETED AMORTIZATION CLASS (TAC) BOND A TRANCHE
link.springer.com [PDF]
… TARGETED AMORTIZATION CLASS (TAC) BOND A TRANCHE of a COLLATERALIZED MORTGAGE OBLIGATION (CMO) that … of speeds, as is characteristic of the PLANNED AMORTIZATION CLASS BOND) … ance of an investment PORTFOLIO and a target or BENCHMARK …

Valuation and analysis of collateralized mortgage obligationsValuation and analysis of collateralized mortgage obligations
pubsonline.informs.org [PDF]
… TARGETED AMORTIZATION CLASS (TAC) BOND A TRANCHE of a COLLATERALIZED MORTGAGE OBLIGATION (CMO) that … of speeds, as is characteristic of the PLANNED AMORTIZATION CLASS BOND) … ance of an investment PORTFOLIO and a target or BENCHMARK …

Securitization, deregulation, economic stability, and financial crisis, Part I-The evolution of securitizationSecuritization, deregulation, economic stability, and financial crisis, Part I-The evolution of securitization
papers.ssrn.com [PDF]
… TARGETED AMORTIZATION CLASS (TAC) BOND A TRANCHE of a COLLATERALIZED MORTGAGE OBLIGATION (CMO) that … of speeds, as is characteristic of the PLANNED AMORTIZATION CLASS BOND) … ance of an investment PORTFOLIO and a target or BENCHMARK …

E. Banks, The Palgrave Macmillan Dictionary of Finance, Investment and Banking© Erik Banks 2010E. Banks, The Palgrave Macmillan Dictionary of Finance, Investment and Banking© Erik Banks 2010
link.springer.com [PDF]
… TARGETED AMORTIZATION CLASS (TAC) BOND A TRANCHE of a COLLATERALIZED MORTGAGE OBLIGATION (CMO) that … of speeds, as is characteristic of the PLANNED AMORTIZATION CLASS BOND) … ance of an investment PORTFOLIO and a target or BENCHMARK …

Toward parallel financial computation: valuation of mortgage-backed securitiesToward parallel financial computation: valuation of mortgage-backed securities
ieeexplore.ieee.org [PDF]
… TARGETED AMORTIZATION CLASS (TAC) BOND A TRANCHE of a COLLATERALIZED MORTGAGE OBLIGATION (CMO) that … of speeds, as is characteristic of the PLANNED AMORTIZATION CLASS BOND) … ance of an investment PORTFOLIO and a target or BENCHMARK …

Direct inflation targeting in Central EuropeDirect inflation targeting in Central Europe
www.tandfonline.com [PDF]
… TARGETED AMORTIZATION CLASS (TAC) BOND A TRANCHE of a COLLATERALIZED MORTGAGE OBLIGATION (CMO) that … of speeds, as is characteristic of the PLANNED AMORTIZATION CLASS BOND) … ance of an investment PORTFOLIO and a target or BENCHMARK …


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