- 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
Which of the following are forms of internal credit enhancements for an asset-backed security?
II. Guarantee by a corporation
III. Bond insurance
IV. Over-collateralization
I. Senior-subordinated structure
II. Guarantee by a corporation
III. Bond insurance
IV. Over-collateralization
Correct Answer: I and IV
User Contributed Comments 3
| User | Comment |
|---|---|
| carsonson | senior-subordinated structure = tranche struture ? |
| reccy | External= 3rd party guarantee. Bond insurance= insurance company guarantees against risk |
| khalifa92 | @casonon, you're are right they are the same. |