Targeted Amortization Class (TAC)
A type of credit derivative that is similar to a planned amortization class (PAC) in that it protects investors from prepayment; however, it is structured differently than a PAC. TACs protect investors from a rise in the prepayment rate or a fall in interest rates. They do not protect from a fall in the prepayment rate like PACs.

Investopedia Says:
The TAC is essentially a bond under a collateralized mortgage obligation (CMO). Under a TAC, the principal is paid on a predetermined schedule. Any prepayment that occurs is amortized in order to maintain the schedule. TACs are inferior to PACs because they only provide one-sided prepayment protection.

Related Terms:
Collateralized Mortgage Obligation - CMO
Companion Bond
Mortgage
Mortgage-Backed Securities - MBS
Planned Amortization Class (PAC) Tranche
Prepayment Risk
Tranches

• Standard & Poor's (S&P)
• Standard & Poor's (S&P)
• Standard Poor's Underlying Rating (SPURs)
• Standard Poor's Underlying Rating (SPURs)
• Standby Letter of Credit (SLOC)
• Standby Underwriting
• Standstill Agreement
• Staple Financing
• Star
• STARC Bands
• STARC Bands
• Startup
• State Administrator
• Stated Annual Interest Rate
• Stated Income / Stated Asset Mortgage (SISA)
• Stated Value
• State Guaranty Fund
• Statement of Additional Information (SAI)
• Statement of Financial Accounting Concepts (SFAC)
• Statement of Financial Accounting Concepts (SFAC)
• Statement of Financial Accounting Standards (SFAS)
• Statement of Financial Accounting Standards (SFAS)
• Static Budget
• Static Spread
• Statistical Arbitrage