Series 7: Targeted Amortization Class (TAC)

Taken from our Series 7 - General Securities Representative Exam

Definition of the term Targeted Amortization Class (TAC)...

a CMO structure that provides complete protection against prepayment risk but does not protect against extension risk. Excess prepayments are diverted from the TAC tranche to the companion tranche, but if prepayments are lower than the defined rate, TAC bondholders may receive less principal than the scheduled payment.

Since you're reading about Series 7: Targeted Amortization Class (TAC), you might also be interested in:

Solomon Exam Prep Study Materials for the Series 7
Please Enable Javascript
to view this content!