hard · Asset-Backed Securities
A sponsor elects to utilize a 'Discount Option' in a credit card master trust where the portfolio yield is under pressure.
What is the immediate effect of this election on the excess spread calculation?
- It reduces charge-offs by accelerating the recovery timeline
- It increases the MPR by encouraging faster cardholder repayments
- It increases the portfolio yield by reclassifying a portion of principal as finance charges
- It decreases the base rate by lowering the required servicing fee
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