alleryStart learning →A floating rate ABS is typically priced at which rate?
AA fixed coupon set at issue
BThe originator's dividend rate
CA zero interest rate
DAn index plus a fixed margin
Answer & Solution
Correct answer: D. An index plus a fixed margin
Floaters reset against an index such as LIBOR, plus a fixed margin covering the added risk.
Keep practising Securitization
Browse all Securitization questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
Why is credit card debt called a nonamortizing loan?Which US agency guarantees timely MBS payments with the full faith and credit of the US goWhich extra risk does an MBS carry compared with a vanilla corporate bond?A pool has Rs 200 lakh maturing in 120 months and Rs 600 lakh maturing in 240 months. WhatA mortgage pool has Rs 300 lakh at 6% and Rs 100 lakh at 8%. What is the weighted-average An MBS factor measures what?A principal-only (PO) stripped MBS has cash flows backed by what?Which MBS is backed by mortgages on single-family, one- to four-unit real estate?