A security created by pooling loans (other than residential prime mortgage loans) is referred to as ________.

Question

Quizplus · Accepted Answer

The term "asset-backed security (ABS)" refers to a security or bond that is created by pooling various types of loans, such as credit card debt, auto loans, and student loans. This term specifically excludes residential prime mortgage loans, which would fall under the category of "mortgage-backed securities (MBS)." Therefore, option C is the correct answer. Option A is incorrect because it refers specifically to residential loans, and option D is incorrect because it specifically mentions prime mortgage loans.

A Security Created by Pooling Loans (Other Than Residential Prime