true or false on asset backed securities management, security, rating, false

dreampak

the servicer's quality plays a much greater role in determining an asset backed security's rating than the firm's management quality does for a bond.

tikfed

.



Edited 1 time(s). Last edit at Wednesday, June 1, 2011 at 11:49AM by beingthatguy.

tianxin

Management quality for a bond is same thing as economic policy for a sovereign debt.


Servicer for an ABS plays no role, as it doesn't lower credit risk/liquidity risk/prepayment risk.

So i'd say false.

genuinecfa

pepp Wrote:
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> Management quality for a bond is same thing as
> economic policy for a sovereign debt.
>
>
> Servicer for an ABS plays no role, as it doesn't
> lower credit risk/liquidity risk/prepayment risk.
>
> So i'd say false.


The factor 2 of question #16 in CFAI 2011 mock pm was talking about the quality of the servicer?
If so, the servicer's quality seems playing some roles in the credit rating.
I chose B for that question

giorgio10

the servicer for an ABS plays a larger role than the firms management

sameeragarwal

pepp Wrote:
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> can someone pls explain this question, and what
> page to refer, and what chapter.

The question excerpted from CFAI 2009 mock AM #48.
The answer said it is a false statement, the reason as your explained.

Houjichasan

who gives a shi* about the servicer's quality, all they are doing is collecting cash flows and pushing the cash around. Management of a corporation makes all sorts of decisions that affects the character/capacity/quality etc.. of a corporate bond

firat

AndrewUNH Wrote:
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> who gives a shi* about the servicer's quality, all
> they are doing is collecting cash flows and
> pushing the cash around. Management of a
> corporation makes all sorts of decisions that
> affects the character/capacity/quality etc.. of a
> corporate bond


+1