Which of the Following Is an Example of an Asset-Backed

question 61

Multiple Choice

Which of the following is an example of an asset-backed security?

• A) a debenture issued by a reputed U.S. corporation
• B) a derivative based on auto loans
• C) a home loan issued by a bank
• D) equity share of a U.S. company
• E) a preference share issued by a U.S corporation

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Definitions:

Annuity Growth Rate

The rate at which the value of an annuity investment increases over time.

Compounded Annually

A method of calculating interest in which the interest earned each year is added to the principal, so that the balance doesn't merely grow, it grows at an increasing rate.

Growing Annuity

A series of cash flows that grow at a constant rate for a specific number of periods.

Cash Flow Growth Rate

The rate at which a company's cash flow increases over a specified period.