hard · Asset-Backed Securities
An investor is comparing two ABS bonds: one with a 50% 'Hard Credit Support' and another with a 10% 'Hard Credit Support' but 5% annual excess spread.
Which bond is inherently more protected against immediate, large-scale defaults at closing?
- The bond with the higher excess spread
- The bond with 10% Hard Credit Support and 5% excess spread
- The bond with 50% Hard Credit Support
- Both are equally protected
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