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What Does Planned Amortization Class (PAC) Tranche Mean?

April 26, 2017amortization class mean PAC planned tranche

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What Does Planned Amortization Class (PAC) Tranche Mean?

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A class of tranche in a planned amortization class (PAC) bond that receives a primary payment schedule. As long as the actual prepayment rate is between a designated range of prepayment speeds, the life of the PAC tranche will remain relatively stable. This tranche of the PAC bond receives some measure of protection against prepayment risk.