ABS - why no business/operating risks? someone, business

hoangvu90

Schweser Book 4 page 149: "There are no business or operating risks to assess with an ABS."


Can someone explain why?

eoin

because there is no underlying business that ability to repay the debt is based on

tarunajwani

an ABS is based on credit card receivables, student loans, etc. these collaterals do not involve business operations, the collaterals are simply loans which generate principal and interest payments and simply involve prepayment risks and credit risks