Which of the following statements about covered bonds and asset-backed securities is most accurate?

A. Both covered bonds and ABS pass prepayment and extension risk of the underlying asset pool through to investors.

B. Both covered bonds and ABS offer investors recourse to both the bond’s issuer and the underlying asset pool.

C. Covered bonds have a dynamic cover pool in which sponsors must replace prepaid or non-performing assets, whereas ABS, such as mortgage-backed securities, pass through default and prepayment risk to investors.