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An Auto ABS is backed by a pool of prime credit quality fixed rate auto loans. The ABS investors, however, demand that the issued notes carry a...

An Auto ABS is backed by a pool of prime credit quality fixed rate auto loans. The ABS investors, however, demand that the issued notes carry a floating rate (i.e. LIBOR). Of the options below, the best way for the seller/servicer to convert the nature of their liability is via a:

A. Prepayment option

B. Convertible option

 

C. Interest rate swap

D. Yield Curve Steepener  

Top Answer

C. Interest rate swap This is a technique of interest rate derivative whereby one party will agree to make payments on... View the full answer

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