|
LOS i, (Part 2): State the motivation for a corporation to issue an asset-backed security, and describe the types of external credit enhancements for asset-backed securities.
Q1. There are several types of external credit enhancements. All of the following are examples of external credit enhancements EXCEPT:
A) letters of credit.
B) setting aside reserve funds.
C) corporate guarantees.
Q2. Which of the following statements concerning asset-backed securities (ABSs) is least accurate?
A) ABSs typically have lower debt ratings than the firm's other borrowings.
B) The asset-backed pool may be overcollateralized to provide a credit enhancement.
C) Typical assets to securitize are auto loans and credit card receivables.
Q3. A corporation may issue asset backed securities because:
A) it wants to change the structure of its balance sheet.
B) both of the reasons are valid.
C) it wants to reduce the cost of borrowing.
Q4. To reduce the cost of long-term borrowing, a corporation with a below average credit rating could:
A) issue asset backed securities.
B) decrease credit enhancement.
C) issue commercial paper.
Q5. The issuance of asset backed securities (ABSs) versus straight debt would be desirable if:
A) a better credit quality is desired on the asset backed versus the corporation.
B) there are time constraints on the deal.
C) the corporation's credit rating may go up in the future.
Q6. Which of the following terms describe external credit enhancements for asset backed securities?
A) Corporate guarantee.
B) Both of these choices are external credit enhancements.
C) Bond insurance.
Q7. Which of the following is a general problem associated with external credit enhancements? External credit enhancements:
A) are very long-term agreements and are therefore relatively expensive.
B) are subject to the credit risk of the third-party guarantor.
C) are only available on a short-term basis.
Q8. External credit enhancement least likely includes:
A) corporate guarantee.
B) revenue fund.
C) bond insurance.
| 
发表于 2009-3-2 16:51
| 
