Index Amortizing Note - IAN

Dictionary Says

Definition of 'Index Amortizing Note - IAN'


A type of structured note or debt obligation where principal is repaid for a time interval that increases or decreases in accordance with an amortization schedule connected to a particular index, such as the LIBOR (London Interbank Offered Rate), the CMT (Constant Maturity Treasury), or the mortgage interest rate.



Investopedia Says

Investopedia explains 'Index Amortizing Note - IAN'


An Index Amortizing Note's maturity period extends when interest rates increase. As interest rates decline, the maturity period shortens. Index Amortizing Notes are structured to reduce the holders' interest rate risk. Despite the ability to alter the notes' maturity periods, the IAN has a specified maximum maturity date by which time any remaining principal is paid.


The maturities of index amortizing notes often act in a manner that is similar to those of collateralized mortgage obligations (CMOs) that have embedded prepayment options. As mortgage prepayment rates decline in response to increasing market interest rates, the maturity of an IAN will lengthen; as mortgage prepayment rates increase in response to decreasing market interest rates, the maturity of an IAN will shorten. As with other mortgage-backed instruments, an IAN's connection to interest rates creates a negative convexity exposure.



comments powered by Disqus
Hot Definitions
  1. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  2. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  3. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  4. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  5. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  6. IPO ETF

    An exchange-traded fund that focuses on stocks that have recently held an initial public offering (IPO). The underlying indexes tracked by IPO ETFs vary from one fund manager to another, but index IPO ETFs are usually passively managed and contain equities that have recently been offered to the public.
Trading Center