CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

During the lockout period, the cash flow for a credit card receivable-backed security contains ______ collected from borrowers.

I. interest
II. fees
III. scheduled principal payments
IV. principal repayments
Correct Answer: I and II

Principal paid by borrowers is reinvested in new receivables during the lockout period.

Note that there are no "scheduled" principal payments, only principal payments.

User Contributed Comments 3

User Comment
chessdude Principal is reinvested, that's what means "lockout".
cuban Borrowers can pay back principal along with interest. Its the investors who do not receive the principal payments during the lockout period.
StJohnDale Agreed
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