The rating agencies analyze the structure to test whether the collateral's cash flows match the payments that must be made to satisfy the issuer's obligations and in doing so they must make assumptions about losses and delinquencies and consider various interest rate scenarios after taking into consideration credit enhancements.

Question

Quizplus · Accepted Answer

The statement accurately describes the role of rating agencies in analyzing collateral and making assumptions about losses, delinquencies, and interest rates.

The Rating Agencies Analyze the Structure to Test Whether the Collateral's