Which of the following statements related to securitization is correct?
A) time tranching addresses the uncertainty of a decline in interest rates.
B) Securitizations are rarely structured to include both credit tranching and time tranching.
C) Junior and senior bond classes differ in that junior classes can only be paid off at the bond's set maturity.

Question

Quizplus · Accepted Answer

Time tranching is used in securitization to address the uncertainty of interest rate changes, including declines, by structuring different tranches with varying maturities and interest rate sensitivities.

Which of the Following Statements Related to Securitization Is Correct