None of the features are inconsistent. The Planned Amortization Class (PAC) tranche is a common and widely traded component of collateralized mortgage obligations (CMOs). It is characterized by certain features that define its structure and functioning. The principal repayment of the PAC is based on a sinking fund amortization schedule, which comes along with the initial PAC collars that set the prepayment rates. Every PAC tranche comes with a support tranche which absorbs the excess principal if the actual prepayment rate of the principal is greater than the defined prepayment rate of the PAC tranche collar and vice versa. Therefore, none of the features listed in the question are inconsistent with the actual features of a PAC tranche.

• Feature I (Correct/Consistent): The amortization of a PAC tranche is indeed based on the sinking fund schedule that must prepay the tranche within initial PAC collars. This feature ensures that the principal repayment of a PAC tranche is predictable and less sensitive to changes in prepayment rates.
• Feature II (Correct/Consistent): It's true that a PAC tranche comes with a support tranche, which is created from the original mortgage pool. The support tranches are designed to absorb any variability in prepayments, thereby protecting the PAC tranches from prepayment risk.
• Feature III (Correct/Consistent): If prepayment rates are higher than the upper repayment rate of PAC collars, then the support tranche absorbs the excess principal, and the PAC tranche receives only its scheduled principal amount. This mechanism helps maintain stability in cash flows for investors holding PAC tranches.