- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 45. Introduction to Asset-Backed Securities
- Subject 2. The Securitization Process
CFA Practice Question
When ABS is structured to distribute prepayment risk it is called:
II. Credit tranching.
III. Time tranching.
I. Prepayment tranching.
II. Credit tranching.
III. Time tranching.
A. I only
B. I and III
C. II only
Explanation: Prepayment risk is the uncertainty about the cash flow among different bond classes.
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