Amortization factor

Similar financial terms

Amortization schedule
The principal repayment of a bonds issue can call for either (a) the total principal to be repaid at maturity or (b) the principal repaid over the life of the bond. The latter refers to a schedule of payments which is normally called an amortization schedule. Loans that have this feature are car loans and home mortgage loans.

Amortization
The repayment of a loan by installments.

Planned amortization class CMO
(a) One class of CMO that carries the most stable cash flows and the lowest prepayement risk of any class of CMO. Because of that stable cash flow, it is considered the least risky CMO. (b) A CMO bond class that stipulates cash-flow contributions to a sinking fund. With the PAC, principal payments are directed to the sinking fund on a priority basis in accordance with a predetermined payment schedule, with prior claim to the cash flows before other CMO classes. Similarly, cash flows received ...

Negative amortization
A loan repayment schedule in which the outstanding principal balance of the loan increases, rather than amortizing, because the scheduled monthly payments do not cover the full amount required to amortize the loan. The unpaid interest is added to the outstanding principal, to be repaid later.

Loan amortization schedule
The schedule for repaying the interest and principal on a loan.

Negative amortization
A gradual increase in mortgage debt that occurs when the monthly payment is not large enough to cover the entire principal and interest due. The amount of the shortfall is added to the remaining balance to create "negative" amortization.

Planned Amortization Class
A security which is structured to have a reasonable life expectancy provided the prepayment speeds stay within the defined ranges. The scheduled interest and principal payments tend to be more stable for these tranches relative to the other parts of the deal.

Two-factor model
Black's zero-beta version of the capital asset pricing model.

Single factor model
A model of security returns that acknowledges only one common factor.

Reported factor
The pool factor as reported by the bond buyer for a given amortization period.

Present value factor
Factor used to calculate an estimate of the present value of an amount to be received in a future period.

Pool factor
The outstanding principal balance divided by the original principal balance with the result expressed as a decimal. Pool factors are published monthly by the Bond Buyer newspaper for Ginnie Mae, Fannie Mae, and Freddie Mac(Federal Home Loan Mortgage Corporation) MBSs.

One-factor APT
A special case of the arbitrage pricing theory that is derived from the one-factor model by using diversification and arbitrage. It shows the expected return on any risky asset is a linear function of a single factor.

Old-line factoring
Factoring arrangement that provides collection, insurance, and finance for accounts receivable.

Net benefit to leverage factor
A linear approximation of a factor, T*, that enables one to operationalize the total impact of leverage on firm value in the capital market imperfections view of capital structure.

Multifactor CAPM
A version of the capital asset pricing model derived by Merton that includes extramarket sources of risk referred to as factor.

Maturity factoring
Factoring arrangement that provides collection and insurance of accounts receivable.

Conversion factors
Rules set by the Chicago Board of Trade for determining the invoice price of each acceptable deliverable Treasury issue against the Treasury Bond futures contract.

Factor market
The place where inputs or resources are bought or sold. Factor markets usually refer to labor or capital.