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Planned Amortization Class (PAC) Bond
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A collateralized mortgage obligation that pays principal based upon a predetermined schedule, derived by amortizing the collateral at two different prepayment speeds. These two speeds are the endpoints for the 'structuring PAC range.' The PAC II range must be tighter than the PAC I range. PAC III's are defined as classes with a structuring range narrower than the structuring range of the PAC II's, and so forth. See also Busted Planned Amortization Class (PAC) Bond, Super Planned Amortization Class (Super PAC) Bond, Very Accurately Defined Maturity (VADM) Bond, Interest Only (IO) Obligation, Principal Only (PO) Obligation.
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