- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 45. Introduction to Asset-Backed Securities
- Subject 5. Collateralized Mortgage Obligations
CFA Practice Question
A reserve account is used in asset-backed securities for ______.
A. liquidity
B. credit enhancement
C. holding temporary excess funds
Explanation: A reserve account is used to make payments in case of default or missed payments by the borrowers.
User Contributed Comments 1
| User | Comment |
|---|---|
| danlan2 | A reserve account is used for internal credit enhancement. |