hard · Asset-Backed Securities
A middle-market equipment lease ABS pool is divided into Finance Leases (60%) and Operating Leases (40%). The trust booking assumes a 25% residual value for operating equipment.
If secondary market values for used equipment collapse to 60% of original expectations, what is the total loss impact on the pool's original balance from residuals alone?
- 4.0%
- 1.5%
- 10.0%
- 6.0%
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