Although the Priority Rules for the Disbursement of the Principal

question 29

Multiple Choice

Although the priority rules for the disbursement of the principal payments are known, the precise amount of the principal in each period ________ known. This will depend on the cash flow and, therefore, on the principal payments of the collateral, which will depend on the ________ of the collateral. An assumed ________ allows the cash flow to be projected.

• A) is; actual prepayment rate; PSA speed
• B) is not; actual prepayment rate; PSA speed
• C) is; projected prepayment rate; CPR speed
• D) is not; actual prepayment rate; SMM speed

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Definitions:

Power Divider

A component in vehicle drivetrains, particularly in heavy trucks, used to distribute power evenly across multiple axles.

Forward Differential

A differential gear arrangement that allows the driven wheels to rotate at different speeds, typically located at the front of vehicles with front-wheel drive.

Drive Torque

The force that causes rotation in a vehicle, typically measured at the drive wheels, which directly impacts acceleration.