CFA Level 2 – Fixed Income Session 15

CFA Level 2 – Fixed Income
Session 15-Reading 58, Asset-Backed Sector of the Bond Market-LOS c

(Notes, Practice Questions, Sample Questions)

1. Which of the following is NOT a feature of an asset-backed security backed by non-amortizing assets?

A) During a lockout period, principal payments are not distributed to the bondholders.
B) The composition of the underlying loans does not change.
C) A call provision can be triggered when collateral reaches a certain level

Explanation: In an asset-backed security backed by non-amortizing assets (e.

g. credit cards), the composition of loans in the pool will change. During the lockout period, principal payments are not distributed to bondholders. Instead, new loans are purchased and this structure is referred to as a revolving structure. However, the retirement of principal (i.e. a call provision) in a revolving structure can be triggered by several different events. These events include a specific date, when the collateral falls below a certain level, or when cumulative losses in the collateral reach a certain level
2. Which of the following statements regarding the structure of asset-backed securities (ABS) backed by amortizing assets is least accurate?

A) A lockout period results in a revolving structure.
B) An example of this ABS is that backed by automobile loans.
C) No new loans are added to the pool

Explanation: In an asset-backed security backed by amortizing assets (e.g. automobile loans), the composition of loans in the pool will not change. No new loans are purchased. A lockout period provision refers to an ABS backed by non-amortizing loans

3. Suppose an investor did not want to be concerned with the risk of having to reinvest the early repayment of principal. What type of security should he invest in? A security backed by:

A) amortizing assets.
B) automobile loans.
C) non-amortizing assets

Explanation: In security backed by non-amortizing assets (e.g. credit cards), early repayment of the principal will not be distributed to investors during the lockout period. Instead, new loans will be purchased. In a security backed by amortizing assets (e.g. automobile loans or mortgages), principal repayments can be distributed to investors

Remember! This is just a sample.

You can get a custom paper by one of our expert writers.

Get your custom essay

Helping students since 2015

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Homework Mules
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Political science
Thank you!
Customer 452701, February 12th, 2023
Finance
Thank you very much!! I should definitely pass my class now. I appreciate you!!
Customer 452591, June 18th, 2022
Business Studies
Great paper thanks!
Customer 452543, January 23rd, 2023
Education
Thank you so much, Reaserch writer. you are so helpfull. I appreciate all the hard works. See you.
Customer 452701, February 12th, 2023
Technology
Thank you for your work
Customer 452551, October 22nd, 2021
Political science
I like the way it is organized, summarizes the main point, and compare the two articles. Thank you!
Customer 452701, February 12th, 2023
Accounting
Thank you for your help. I made a few minor adjustments to the paper but overall it was good.
Customer 452591, November 11th, 2021
Psychology
I requested a revision and it was returned in less than 24 hours. Great job!
Customer 452467, November 15th, 2020
Psychology
Thank you. I will forward critique once I receive it.
Customer 452467, July 25th, 2020
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Show more
<