Martina
Sat Nov 09 2024
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7 answers
1676
How do PAC bonds work?
PAC bonds, or Planned Amortization Class collateralized mortgage obligations, provide a set average life within specific prepayment assumptions. They are structured to offer stability in average life variability, making them attractive to institutional investors seeking better asset and liability matching. PAC bonds work by having a fixed principal repayment schedule that must be met, ensuring predictability in cash flows.
