Reading 60: Asset-Backed Sector of the Bond Market - LOS following, black

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1．Which of the following is referred to as a lockout period for a credit card receivable-backed security? A lockout period is a specific period of time during which:

A)   credit card borrowers are not allowed to make repayments.

B)   credit card borrowers are not allowed to make interest rate payments.

C)   interest payments made by credit card borrowers are retained by the trustee.

D)   principal payments made by credit card borrowers are retained by the trustee.

2．Which of the following is TRUE concerning the early amortization trigger for a credit card receivable-backed security? An early amortization trigger leads to:

A)   credit card tranches being retired sequentially.

B)   partial default.

C)   the interest payments made by credit card holders being reinvested in receivables.

D)   the principal payments made by credit card holders being reinvested in receivables.

3．Which of the following is referred to as principal-amortization period for a credit card receivable-backed security? The principal-amortization period is the period during which the:

A)   interest is reinvested.

B)   principal is no longer reinvested, but paid to investors.

C)   principal is reinvested.

D)   interest is no longer reinvested, but paid to investors.

4．Which of the following statements regarding credit card receivable-backed securities is FALSE?

A)   Credit card receivable-backed securities pay principal and interest each payment just like a mortgage-backed security.

B)   Credit card receivable-backed securities use a master trust structure.

C)   The issuer can sell more than one series from the same pool of receivables.

D)   The cash flow to the pool of credit card receivables consists of finance charges, fees, and principal repayment.

5．Which of the following statements regarding Small Business Administration (SBA) loan-backed securities is FALSE?

A)   Most SBA loans are variable rate.

B)   Loan payments are based on the reference rate at the beginning of each period.

C)   The interest rate on SBA loans is reset monthly or quarterly.

D)   Pooled SBA loans are fairly heterogeneous.