The asset-backed securities (ABS) market has grown in the past few years partly as a result of

Question:

The asset-backed securities (ABS) market has grown in the past few years partly as a result of credit enhancements to ABS.
a. Describe a “letter of credit” and the risk to the investor associated with relying exclusively on this type of credit enhancement.
b. Describe “early amortization” and the risk to the investor associated with relying exclusively on this type of credit enhancement.