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Planned amortization class CMO

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Definition of Planned amortization class CMO

Planned Amortization Class CMO Image 1

Planned amortization class CMO

1) One class of cmo that carries the most stable cash flows and the
lowest prepayement risk of any class of cmo. Because of that stable cash flow, it is considered the least risky cmo.
2) A cmo bond class that stipulates cash-flow contributions to a sinking fund. With the PAC,
principal payments are directed to the sinking fund on a priority basis in accordance with a predetermined
payment schedule, with prior claim to the cash flows before other cmo classes. Similarly, cash flows
received by the trust in excess of the sinking fund requirement are also allocated to other bond classes. The
prepayment experience of the PAC is therefore very stable over a wide range of prepayment experience.



Related Terms:

ABC inventory classification

A method for dividing inventory into classifications,
either by transaction volume or cost. Typically, category A includes that 20% of
inventory involving 60% of all costs or transactions, while category B includes
the next 20% of inventory involving 20% of all costs or transactions, and category
C includes the remaining 60% of inventory involving 20% of all costs or
transactions.


Amortization

The repayment of a loan by installments.


Amortization

See depreciation, but usually in relation to assets attached to leased property.


amortization

This term has two quite different meanings. First, it may
refer to the allocation to expense each period of the total cost of an
intangible asset (such as the cost of a patent purchased from the inventor)
over its useful economic life. In this sense amortization is equivalent
to depreciation, which allocates the cost of a tangible long-term operating
asset (such as a machine) over its useful economic life. Second, amortization
may refer to the gradual paydown of the principal amount of a debt.
Principal refers to the amount borrowed that has to be paid back to the
lender as opposed to interest that has to be paid for use of the principal.
Each period, a business may pay interest and also make a payment on
the principal of the loan, which reduces the principal amount of the loan,
of course. In this situation the loan is amortized, or gradually paid down.


Amortization

Reduction in value of an asset over some period for accounting
purposes. Generally used with intangible assets. Depreciation is the term used
with fixed or tangible assets.



Amortization

The write-off of an asset over the period when the asset is used. This term
is most commonly applied to the gradual write-down of intangible items, such as
goodwill or organizational costs.


Amortization

The systematic and rational allocation of capitalized costs over their useful lives.
Refer also to depreciation and depletion.


Planned Amortization Class CMO Image 2

Amortization

The reduction of debt by regular payments of interest and principal sufficient to pay off a loan by maturity.


amortization

The repayment of a loan by installments.


Amortization (Credit Insurance)

Refers to the reduction of debt by regular payments of interest and principal in order to pay off a loan by maturity.


Amortization factor

The pool factor implied by the scheduled amortization assuming no prepayemts.


Amortization Schedule

A schedule that shows precisely how a loan will be repaid. The schedule gives the required payment on each specific date and shows how much of it constitutes interest and how much constitutes repayments of principal.


Asset classes

Categories of assets, such as stocks, bonds, real estate and foreign securities.


Average Amortization Period

The average useful life of a company's collective amortizable asset base.


Classical Macroeconomics

The school of macroeconomic thought prior to the rise of Keynesianism.


Collateralized mortgage obligation (CMO)

A security backed by a pool of pass-throughs , structured so that
there are several classes of bondholders with varying maturities, called tranches. The principal payments from
the underlying pool of pass-through securities are used to retire the bonds on a priority basis as specified in
the prospectus.
Related: mortgage pass-through security


Planned Amortization Class CMO Image 3

Earnings before interest, taxes, depreciation and amortization (EBITDA)

The operating profit before deducting interest, tax, depreciation and amortization.


Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working
capital provided by operations before interest and taxes.



Extended Amortization Period

An amortization period that continues beyond a long-lived asset's economic useful life.


Extended Amortization Periods

Amortizing capitalized expenditures over estimated useful lives that are unduly optimistic.


functional classification

a separation of costs into groups based on the similar reason for their incurrence; it includes
cost of goods sold and detailed selling and administrative
expenses


Loan amortization schedule

The schedule for repaying the interest and principal on a loan.


Negative amortization

A loan repayment schedule in which the outstanding principal balance of the loan
increases, rather than amortizing, because the scheduled monthly payments do not cover the full amount
required to amortize the loan. The unpaid interest is added to the outstanding principal, to be repaid later.


New Classicals

Economists who, like classical economists, believe that wages and prices are sufficiently flexible to solve the unemployment problem without help from government policy.


Planned capital expenditure program

Capital expenditure program as outlined in the corporate financial plan.


Planned financing program

Program of short-term and long-term financing as outlined in the corporate
financial plan.


Risk class

A group of insureds who present similar risk to the insurance company. Risk classes include - standard, preferred, nonsmoker, substandard, uninsurable.


Risk classes

Groups of projects that have approximately the same amount of risk.



Unplanned receipt

A stock receipt for which no order was placed or for which an
excess quantity was received.



 

 

 

 

 

 

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