CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

Suppose that the structure for an asset-backed security is as follows:

Senior bond class: $200 million
Subordinated bond class 1: $30 million
Subordinated bond class 2: $20 million

The subordinated bond class 2 is the first loss piece. If losses due to defaults over the life of the structure total $60 million, what is the amount of loss for the senior bond class?
A. 0
B. $10 million
C. $20 million
Explanation: $60 million - $20 million - $30 million = $10 million.

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