A CMO tranche that protects another tranche from prepayment risk by assuming a greater share of that risk.
Related information about companion bonds:
- What is companion bonds? definition and meaning
Definition of companion bonds: A CMO tranche that protects another tranche from prepayment risk by assuming a greater share of that risk.
- What Are Collateralized Mortgage Obligations?
2, What Are Collateralized Mortgage Obligations? 3, Companion Bonds and PACs. 4, Strategic Considerations for Collateralized Mortgage Obligations ...
- Companion Bonds and PACs
Companion bonds are a special class of CMO bond that is paid off first when the underlying mortgages in a CMO pool are prepaid. Prepayments tend to occur ...
- Companion Bond: Definition from Answers.com
When interest rates rise and there are fewer prepayments, the principal on companion bonds will be prepaid more slowly. Companion bonds therefore absorb ...
- What are Companion Bonds?
Brief and Straightforward Guide: What are Companion Bonds?
- PAC Bond
They do this by transferring essentially all prepayment risk to other bonds in the CMO. Appropriately, those other bonds are called support or companion bonds.
- Collateralized mortgage obligation - Wikipedia, the free encyclopedia
The schedule is maintained by using support bonds (also called companion bonds) that absorb the excess prepayments. Planned Amortization Class (PAC) ...
- companion bond - Invest Definition
In a collateralized mortgage obligation, a class of bonds most likely to be retired early from mortgage prepayments. Companion bonds entail more payment risk ...