Which statement regarding covered bond is TRUE?

A. A covered bond is typically issued by a SPE.
B. It has a multiple tranche structure.
C. Its covered pool is made up of mortgages and public sector loans.

Correct Answer: C

An ABS is issued by a SPE (special purpose entity) while a covered bond is typically issued by a bank. Covered bond holders have a dual recourse, both over the issuer - with whom the obligation to pay lies - and over the covered pool all its cash flows in case of issuer's insolvency.