Unit 12: Other Securities Flashcards
1
Q
Asset-Backed Securities (ABS)
A
Like MBS but pooled loans are non-mortgage debt: auto, student, aircraft loans/leases
2
Q
CMO interest paid…
A
all tranches simultaneously
3
Q
CMO principal paid…
A
Tranche 1 first, then 2, 3, …
4
Q
Planned Amortization Class (PAC)
A
Targeted Maturity Date
Less sensative to prepayment and extension
lower return
5
Q
Targeted Amortization Class (TAC)
A
Plan for prepayments, don’t plan for extension
Less sensitive to prepayment, but not extension
higher return than PAC
6
Q
Z Tranche
A
No annual interest
“zero”
buy at discount
