Amortizing securities

The source of dollar return called reinvestment income represents the interest earned from reinvesting the bond s interim cash flows (interest and/or principal payments) until the bond is removed from the investor s portfolio. With the exception of zero-coupon bonds, fixed income securities deliver coupon payments that can be reinvested. Moreover, amortizing securities (e.g., mortgage-backed and asset-backed securities) make periodic principal repayments which can also be invested. 

Recognition of certain basic principles of building layout can help the design engineer make judicious decisions. The fundamental principle is to secure, minimum total building costs (amortized first cost, plus maintenance and operating cost of building services). The total required... 

Another type of hybrid security is the indexed amortizing note, or IAN. LANs were introduced in the U.S. market in the early 1990s in response to demand by investors in asset-backed notes known as collateralized mort-... 

In the PAC structure, the uncertainty of principal payments is directed to another class of security, i.e., another tranche in the CMO, known as the companion, or support, class. When prepayment rates are high, companion issues support the main PACs by absorbing any principal prepayments that are in excess of the PAC schedule when the rate falls, the companion amortization is delayed if principal prepayments are not sufflcient to reach the minimum stipulated by the PAC band. Accordingly, when prepayment rates are high, the companions average life shortens when rates are low, their average life lengthens. Within the set of PACs and the set of companions, the principal cash flows can be allotted sequentially, as in the sequential-pay structure. 

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