SIE Exam Question 825: Answer and Explanation

Question: 825

Which of the following is a type of bond offered as a tranche class of some CMOs, according to a sinking-fund schedule?

• A. General obligation bond
• B. Planned amortization class (PAC) bond
• C. Targeted amortization class (TAC) bond
• D. Zero-coupon bond

Correct Answer: C

Explanation:

A targeted amortization class (TAC) bond is a type of bond offered as a tranche class of some CMOs, according to a sinking-fund schedule.