INTEREST ONLY Definition

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INTEREST ONLY (IO),in securities, is the interest only portion of a stripped mortgage-backed security. For IO securities, all of the interest distribution is due to the registered holder based on the current face value of the underlying mort­gage-backed security.

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REDEMPTION is the repayment of the principal amount of a debt or security at or before maturity (as when a corporation repurchases its own stock).

BENEFICIAL OWNER is the person who enjoys the benefits of ownership even though title is in another name (often used in risk arbitrage).

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