medium · Asset-Backed Securities
A lender sells the guaranteed portion of an SBA 7(a) loan at a price of 108.
If the loan prepays immediately (Month 1), how does this affect the investor's yield compared to a loan that lasts its full 10-year term?
- The yield is unaffected because SBA loans have 100% lockout periods
- The yield increases due to the 'Special Allowance Payment' (SAP)
- The yield decreases significantly due to premium amortization
- The investor receives a 'Yield Maintenance' penalty that covers the loss
Sign up free to see the explanation and track your rank →
More Asset-Backed Securities practice
- Which vehicle was specifically created by the Tax Reform Act of 1986 for this asset class?
- What is the most likely tax structure?
- Given the real estate collateral, which tax vehicle is standard for this multi-class trans
- In a two-step auto-loan securitization, the originator first… — What is the principal lega
- Under ASC 860, which condition must be met for a transfer of receivables from an originato
- Why does it covenant NOT to incur additional debt?
- A CLO manager is actively buying and selling senior secured… — Which phase of the transact
- Which explanation best identifies the additional spread components in the non-agency bond?