medium · Asset-Backed Securities collateral
An Equipment Lease ABS trust holds $300M of operating leases. At lease maturity, the 'booked' residual value is $60M (20% of original pool).
If a severe recession causes realized residuals to fall to 70% of booked values, what is the total loss to the trust from residual shortfalls, assuming no credit defaults on rental payments?
- $18M
- $90M
- $6M
- $42M
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