The following questions relate to credit card receivable–backed securities:

a. What happens to the principal repaid by borrowers in a credit card receivable–backed security during the lockout period?

b. What is the role of the early amortization provision in a credit card receivable–backed security structure?

c. How can the cash flow of a credit card receivable–backed security be altered prior to the principal-amortization period?

d. Why is the monthly payment rate an important measure to examine when considering investing in a credit card receivable–backed security?