easy · Asset-Backed Securities
For a seasoned auto ABS pool, how does the exercise of a 10% clean-up call impact the Weighted Average Life (WAL) of the remaining tranches?
- It converts the WAL from a principal measure into an interest measure.
- It extends the WAL because the final payment is delayed.
- It shortens the WAL by accelerating the final principal repayment.
- It has no effect because the principal was already mostly paid down.
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