Exam 4: Introduction to Asset-Backed Securities

Securitization is beneficial for banks because it:

The key to a Cdo's viability is the creation of a structure with a competitive return for the:

Which of the following best describes the cash flow that owners of credit card receivable asset-backed securities receive during the lockout period?

If interest rates increase, an investor who owns a mortgage pass-through security is most likely affected by:

In auto loan aBS, the form of credit enhancement that most likely serves as the first line of loss protection is the:

Which of the following investments is least subject to prepayment risk?

Support tranches are most appropriate for investors who are:

a special purpose entity issues asset-backed securities in the following structure. Bond Class Par Value ( millions) A (senior) 200 B (subordinated) 20 C (subordinated) 5 at which of the following amounts of default in par value would Bond Class a experience a loss?

William Marolf obtains a 5 million eur mortgage loan from Bank nederlandse. a year later the principal on the loan is 4 million eur and Marolf defaults on the loan. Bank Nederlandse forecloses, sells the property for 2.5 million eur, and is entitled to collect The 1.5 million eur shortfall from Marolf. Marolf most likely had a:

When the collateral manager fails pre-specified risk tests, a Cdo is:

a commercial mortgage-backed security (CMBS) does not meet the debt-to-service cov- erage at the loan level necessary to achieve a desired credit rating. Which of the following Features would most likely improve the credit rating of the CMBS?

In a securitization, time tranching provides investors with the ability to choose between:

The last payment in a partially amortizing residential mortgage loan is best referred to as a:

an excess spread account incorporated into a securitization is designed to limit:

Which of the following statements is correct concerning mortgage loan defaults?

The Cdo tranche with a credit rating status between senior and subordinated bond class- es is called the:

Compared with the weighted average coupon rate of its underlying pool of mortgages, the pass-through rate on a mortgage pass-through security is:

a ba1lloon payment equal to a mortgage's original loan amount is a characteristic of a:

Fran Martin obtains a non-recourse mortgage loan for $500,000. one year later, when the outstanding balance of the mortgage is $490,000, Martin cannot make his mortgage Payments and defaults on the loan. The lender forecloses on the loan and sells the house For $315,000. What amount is the lender entitled to claim from Martin?

The creation of bond classes with a waterfall structure for sharing losses is referred to as: