Which of the Following Describes a Waterfall

question 17

Multiple Choice

Which of the following describes a waterfall?

• A) A distribution of cash flows to tranches with priority given to tranche with the highest rating
• B) A distribution of cash flows to tranches in proportion to their outstanding principals
• C) A distribution of losses to tranches so that tranches bear losses in proportion to their outstanding principals
• D) None of the above

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Definitions:

Private Good

A product or service that is consumed by an individual without its benefits being available to others who have not paid for it, characterized by excludability and rivalry.

Public Good

A product that is non-excludable and non-rivalrous, meaning it can be consumed by multiple people without diminishing availability to others.

Total Quantity Demanded

The sum of all individual quantities of a good or service demanded at a given price level within a specified period.

Public Good

A product that is non-excludable and non-rivalrous in consumption, meaning its use by one individual does not reduce its availability to others.