There are provisions in credit card receivable-backed securities that require ________ of the principal if certain events occur. When ________ occurs, the bond classes are retired sequentially by distributing the principal payments to the specified bond class instead of using those payments to acquire more receivables.

Question

Quizplus · Accepted Answer

Early amortization is a provision in credit card receivable-backed securities that triggers the repayment of the principal before the scheduled time if certain events occur. When early amortization occurs, the bond classes are retired sequentially, meaning the principal payments are distributed to the specified bond class instead of being used to acquire more receivables.

There Are Provisions in Credit Card Receivable-Backed Securities That Require