hard · Asset-Backed Securities
A credit card trust has a portfolio yield of 20%. If the cardholder APR is also 20%, but the MPR is 25%, what does this imply about the 'yield' generated by convenience users?
- It is zero, as convenience users contribute no cash flow to the finance charge pocket
- It is significantly bolstered by fees and interchange, as convenience users avoid interest
- It is negative, as the servicing cost exceeds the zero interest income they provide
- It is equal to the APR because all cardholders are treated identically by the waterfall
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