medium · Asset-Backed Securities
A credit card master trust uses a 'discount option' to manage low-rate environments.
If the trust designates 2% of principal collections as finance charges, what is the primary impact on the trust's performance metrics?
- It lowers the base rate of the series
- It accelerates the amortization of the bonds
- It reduces the charge-off rate
- It increases the portfolio yield and excess spread
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