In a securitized transaction, over-collateralization on results when:
A. The originator puts aside some cash in a reserve account to absorb credit losses.
B. A securitization transaction carves up the cash flows generated from the asset pool into various pieces.
C. The interest payments and other fees received on the assets in the pool exceed the interest payment made on the asset-backed security (ABS) plus the fee paid to service the assets along with miscellaneous expenses.
D. The value of the assets in the pool exceeds the amount of asset-backed security (ABS) involved
Answer:D
A. Stands for cash reserve account
B. Definition for subordinated tranching
C. Mentions about excess spread
D. Is correct defines over collateralization