Investors in ABS are exposed to ________ and rely on ________ to evaluate that risk for the bond classes in a securitization.

Question

Quizplus · Accepted Answer

Investors in ABS are primarily exposed to credit risk since the performance of the underlying assets determines the ability of the issuers to make payments to investors. Rating agencies assess the credit risk of the bond classes in a securitization, and investors rely on their evaluation to determine whether to invest in a particular ABS. While liquidity risk is also a consideration, it is not the primary exposure for ABS investors, and government agencies are not typically involved in evaluating ABS risk.

Investors in ABS Are Exposed to ________ and Rely on ________

Investors in ABS Are Exposed to and Rely on