mortgage obligation A type of MBS with cash flows segregated
into bonds offering different maturity and risk characteristics.
IO and PO
Risky CMO bonds that pay, respectively, only the interest or only
the principal from a mortgage collateral.
Securitized interest in a pool of mortgages. CMOs are a type of
PAC bond A type of CMO bond that is
structured to have minimal prepayment risk. Article illustrates an
application of PSA.
prepayment The early retirement of
debt. This article discusses metrics for MBS prepayment, including
SMM, CPR and PSA.
bond A bond that pays no coupons, pays its par value at
maturity and is issued at a discount.