TEST BANK
CAPITAL MARKETS: INSTITUTIONS AND INSTRUMENTS
FABOZZI/MODIGLIANI
Chapter 27
MARKET FOR ASSET-BACKED SECURITIES
MULTIPLE CHOICE
1. Asset-backed securities are securities backed by:
[E]
2. For a corporation, an asset-backed security:
[M]
3. Amortizing assets are loans, which:
[M]
4. Examples of nonamortizing assets include:
5. For an amortization asset, the amortization is based on the:
[M]
6. The most common forms of external credit enhancements are:
[M]
7. Cash reserve funds are:
[M]
8. The most common forms of internal credit enhancements are:
[M]
9. Home equity loans are typically:
10. Manufactured housing-backed securities, which are backed by loans for manufactured
homes, are issued by:
[M]
11. Prepayments for auto loan-backed securities are measured in terms of:
[D]
12. The monthly cash flow that an investor in an SBA-backed security receives consists of:
[M]
13. In the typical pass-through structure of auto loan-backed deals, there is a:
[M]
14. To purchase student loans in the secondary market and to securitize pools of student
loans, Congress created a government-sponsored enterprise commonly known as:
15. For a pool of credit card receivables, the cash flow consists of:
[M]
16. In an asset-backed security transaction:
[M]
17. Student loans that are not part of a government guarantee program are called:
[M]
18. Asset-backed securities and corporate bonds differ in terms of:
[M]
19. The performance of a portfolio of receivables is measured by:
20. Which of the following statements is false?
TRUE/FALSE
1. All asset-backed securities are credit enhanced.
[E]
2. Commercial banks issue securities backed by auto loans.
[E]
[M]
4. The schedule for the repayment of the principal is called payoff schedule.
[M]
5. The creation of a senior-subordinated structure is a means of credit tranching.
ESSAY QUESTIONS
1. Describe the major differences between an asset-backed security and a corporate bond.
Key Issues:
2. Explain the different types of external and internal credit enhancements.
Key Issues:
3. Discuss the motivation for issuing asset-backed securities.
Key Issues: