The asset-backed securities (ABS) market has grown in the past few years partly as a result of

Question:

The asset-backed securities (ABS) market has grown in the past few years partly as a result of credit enhancements to ABS. Discuss how the credit rating of an ABS issue can be higher than the credit quality of the assets in the underlying portfolio upon which the security is based.

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...

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