The following questions relate to credit card receivable-backed securities. a. What happens to the principal repaid by
Question:
The following questions relate to credit card receivable-backed securities.
a. What happens to the principal repaid by borrowers in a credit card receiv- able-backed security during the lockout or revolving period?
b. What is the role of the early amortization provision in a credit card receiv- able-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. What are the three types of principal repayment structures?
e. Why is the monthly payment rate an important measure to examine when con- sidering investing in a credit card receivable-backed security?
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