easy · Asset-Backed Securities asset-nuances
A hypothetical credit-card series supplement states that, during its revolving period, allocated investor principal collections are available to acquire eligible newly generated receivables so the series' invested amount is maintained.
What is the intended economic effect this month when cardholders repay principal?
- Reduce Class A principal immediately and shorten its expected life each month
- Fund eligible replacement receivables and maintain the series invested amount
- Release all principal to the residual holder regardless of the supplement terms
- Retain all principal until a fixed excess-spread threshold has been exceeded
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