Pass-Through Certificate

See: Pass-Through Security.

When companies sell equity to raise money, they do so by issuing shares. The shares of stock represent little bits of ownership stake. In the old days, before all transactions took place on computers, stockholders had actual paper documents indicating how many shares they had. These stock certificates were the physical proof of ownership...the way a car title proves you own a car.

A pass-through certificate plays a similar role, only instead of proving ownership in a company (or of a Volvo), it proves the holder owns a pass-through security. The document entitles the investor to the income generated through that particular form of investment.