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FinancialMarketsChap25 - Financial Markets Chapter 25 Key...

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Financial Markets Chapter 25 Key Terms and Key Points Key Terms: Absolute Prepayment Speed (ABS) – A measure of prepayments for auto loan-backed securities Amortizing Assets – Loans in which the borrower’s periodic payment consists of scheduled principal and interest payments over the life of the loan Auto Loan-backed Security – An asset-backed security backed by automobile loans Closed-end home equity loan – A home equity loan that is structured the same way as a fixed- rate, fully amortizing, residential mortgage loan Collateralized bond obligation (CBO) – An asset-backed security backed by a diversified pool of one or more of the following types of debt obligations: noninvestment grade corporate bonds, emerging market bonds, and bank loans to corporate entities Credit card receivable-backed security – An asset-backed security backed by a pool of credit card receivables Credit enhancement – Mechanism built into an asset-backed security structure to reduce the credit risk of the underlying pool of assets Early amortization – In a credit card asset-backed security, this refers to the repayment of the
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