In assessing the risk on ABS, rating agencies ignore asset risks, structural risks, third parties to the structure, and the legal structure.

Question

Quizplus · Accepted Answer

This statement is false. Rating agencies consider asset risks, structural risks, third parties to the structure, and the legal structure when assessing the risk on ABS. These factors can significantly impact the creditworthiness of the securities and are taken into account by rating agencies when assigning a rating.

In Assessing the Risk on ABS, Rating Agencies Ignore Asset