Session 15: Fixed Income: Structured Securities
Reading 58: Asset-Backed Sector of the Bond Market
LOS c: Distinguish between the payment structure and collateral structure of a securitization backed by amortizing assets and non-amortizing assets.
Which of the following is NOT a feature of an asset-backed security backed by non-amortizing assets?
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A) |
During a lockout period, principal payments are not distributed to the bondholders. | |
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B) |
The composition of the underlying loans does not change. | |
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C) |
A call provision can be triggered when collateral reaches a certain level. | |
In an asset-backed security backed by non-amortizing assets (e.g. credit cards), the composition of loans in the pool will change. During the lockout period, principal payments are not distributed to bondholders. Instead, new loans are purchased and this structure is referred to as a revolving structure. However, the retirement of principal (i.e. a call provision) in a revolving structure can be triggered by several different events. These events include a specific date, when the collateral falls below a certain level, or when cumulative losses in the collateral reach a certain level. | 
发表于 2011-3-23 14:42
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