Which of the Following Is FALSE Concerning a Planned Amortization

question 16

Multiple Choice

Which of the following is FALSE concerning a planned amortization class (PAC) tranche?

• A) It has the greatest degree of cash flow certainty.
• B) It receive variable payments.
• C) Payments are received over predetermined period of time.
• D) Payments are received under a range of prepayment scenarios.

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Definitions:

Collateral

Collateral refers to properties or assets that a borrower offers to a lender as security for a loan, which can be confiscated if the borrower fails to repay.

Debtor's Default

A situation where a debtor fails to meet the legal obligations of a loan, such as not making scheduled payments.

Debtor's Estate

The total assets available to a debtor that can be used to settle debts in bankruptcy or insolvency proceedings.

Trustee

A person who operates a trust for beneficiaries in a business trust. In bankruptcy proceedings, an individual who takes over administration of a debtor’s estate.