I just don't get it. So a narrow band means exactly what, the PAC tranche will prob get busted faster? So you are saying once the support tranches are finished trying to maintain the tight band all prepayments will hit the PAC tranche. Also what exactly is the definition is a bond with a bullet payment? Is a Zero Coupon one?
Thanks also FYI I found a really good explanation of this:
"The PAC investor is scheduled to receive fixed principal payments (the PAC "schedule") over a predetermined period of time (the PAC "window") through a range of prepayment scenarios (the PAC "band"). The schedule will be met only if the underlying mortgage-related collateral prepays at a constant rate within the range assumed for the structuring of the PAC."
I was confusing the PAC band with the PAC window. ANyway thanks.
发表于 2011-7-11 19:27
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