Which ratio is calculated as the loan amount divided by the value of the collateral property?
Explanation
LTV is a fundamental credit metric for mortgages; a lower LTV implies less credit risk.
Other questions
What is the primary benefit of the securitization process for the economy and financial markets?
In a securitization transaction, which entity is responsible for collecting payments from borrowers and handling delinquencies?
Which feature best describes a 'bankruptcy remote' entity in the context of asset-backed securities?
In a structure with time tranching, how are principal repayments typically distributed?
A senior/subordinated structure in an asset-backed security is primarily used to redistribute which type of risk?
What is the primary characteristic of a nonrecourse mortgage loan?
Which of the following is considered an agency RMBS issuer backed by the full faith and credit of the U.S. government?
Why is the pass-through rate on a mortgage pass-through security typically lower than the weighted average coupon (WAC) of the underlying loans?
What is 'contraction risk' in the context of mortgage-backed securities?
If a mortgage pool's Conditional Prepayment Rate (CPR) is expected to match the PSA standard benchmark, the PSA is said to be:
Which statement best describes the Single Monthly Mortality (SMM) rate?
In a sequential pay CMO with two tranches (Tranche A and Tranche B), which tranche has the greatest contraction risk?
What is the primary purpose of a Planned Amortization Class (PAC) tranche in a CMO?
Which CMO tranche absorbs prepayment risk in excess of the PAC collar?
If a CMO's prepayment speed falls outside the initial PAC collar, the PAC tranche is referred to as:
Internal credit enhancement for non-agency RMBS includes which of the following?
The 'shifting interest mechanism' in a senior/subordinated structure is designed to:
Commercial mortgage-backed securities (CMBS) loans are typically:
Which ratio is used to assess the credit risk of a commercial property by comparing net operating income to debt service?
Which CMBS call protection mechanism involves replacing the mortgage collateral with a portfolio of government securities?
What is 'balloon risk' in a commercial mortgage?
Auto loan ABS are typically backed by which type of assets?
During the lockout period of a credit card ABS, principal payments made by cardholders are:
Which entity manages the portfolio of debt obligations in a Collateralized Debt Obligation (CDO)?
What distinguishes a covered bond from a standard asset-backed security?
In a CDO structure, the tranche that absorbs the first losses is called the:
Structured finance CDOs are collateralized by which assets?
If a mortgage has a balloon payment equal to the original loan principal, it is best described as:
The risk that principal repayments will be slower than expected is known as:
Which of the following is a motivation for issuing a Collateralized Mortgage Obligation (CMO)?
In a CMBS, what is the 'equity tranche' often referred to as?
A 'hard-bullet' covered bond is defined as:
Which of the following describes 'structural subordination'?
What is the weighted average maturity (WAM) of a mortgage pool?
A 'strategic default' occurs when:
In a credit card ABS, what happens if an 'early amortization' trigger is hit?
Synthetic CDOs differ from cash CDOs because the collateral consists of:
For a lender, a loan with a lower Loan-to-Value (LTV) ratio generally implies:
A mortgage that allows the borrower to switch from a fixed rate to an adjustable rate is called:
In a waterfall structure, the 'first-loss' piece is typically held by:
A 'prime' mortgage loan is characterized by:
Which of the following is NOT a benefit of securitization?
A 100 PSA prepayment speed implies that the prepayment rate (CPR):
Which of the following creates a 'flow' of funds to the different tranches in a securitization?
Generally, as the Loan-to-Value (LTV) ratio increases, the probability of default:
In a credit card ABS, the interest rate paid to investors is:
A Collateralized Bond Obligation (CBO) is a type of CDO backed primarily by:
Which form of CMBS call protection requires the borrower to pay a penalty equal to the present value of lost interest cash flows?
The 'average life' of a mortgage-backed security will likely decrease when: