BUFFER STOCK Definition

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BUFFER STOCK see STOCK RESERVE.

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MORTGAGE-BACKED SECURITY is a security that returns principal and interest monthly as payments are received on the underlying mortgages. Mortgage-backed securities are made up of individual home mortgages guaranteed by the government and its agencies. The mortgages are packaged into pools by the Government National Mortgage Association (GNMA), the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corp. (FHLMC) or a nongovernment-affiliated entity. Unscheduled repayment of principal can shorten the maturity of the bonds.

EARN-OUT refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement.

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