- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 18. Asset-Backed Security (ABS) Instrument and Market Features
- Subject 2. ABS Structures to Address Credit Risk
CFA Practice Question
Even if an asset-backed security is guaranteed by an insurer, it is still subject to credit risk because ______
II. the loss can be higher than the insured amount.
III. the insurer can be downgraded.
IV. the issuer of the security can be downgraded.
I. the insurer can default.
II. the loss can be higher than the insured amount.
III. the insurer can be downgraded.
IV. the issuer of the security can be downgraded.
Correct Answer: I, II and III
Downgrading of the issuer of the security is a result of rather than a reason for increased credit risk.
User Contributed Comments 3
| User | Comment |
|---|---|
| danlan2 | Where can I get this? |
| mazen1967 | from this los |
| rhardin | Read the notes. |