easy · Asset-Backed Securities
If a credit card master trust experiences an 'early amortization event', what is the immediate consequence for a series in its revolving period?
- The originator is required to buy back the entire pool of receivables at par.
- The revolving period terminates, and all allocated principal collections are used to pay down bondholders.
- The interest rate on all bond classes is doubled to compensate investors for the added risk.
- The trust is legally dissolved, and the cardholders are no longer required to pay their balances.
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