medium · Asset-Backed Securities
During the 'Controlled Amortization Period', how do principal payments to bondholders typically differ from payments during 'Rapid Amortization'?
- Controlled amortization payments are made in equal monthly installments over a set term, whereas rapid amortization pays out all available principal immediately.
- Rapid amortization only occurs if the sponsor is in bankruptcy, while controlled amortization is performance-based.
- There is no difference; both periods result in a bullet payment at the expected final maturity date.
- Controlled amortization payments are variable based on cardholder MPR, while rapid amortization uses fixed installments.
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