medium · Asset-Backed Securities
In a AAA rating scenario for a credit card master trust, 'yield compression' stress involves which of the following assumptions?
- A reduction in the portfolio yield to account for fee waivers and decreased finance charges.
- A requirement that the seller must contribute additional higher-yielding receivables.
- The assumption that cardholders will stop making new purchases on their accounts.
- An increase in the base rate due to higher interest rates on the issued bonds.
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