The following questions relate to credit card receivable-backed securities. Answer each one.
(a) What happens to the principal repaid by borrowers in a credit card receivable-backed security during the lockout period?
(b) What is the role of the early amortization provision in a credit card receivable-backed security structure?
(c) How can the cash flow of a credit card receivable-backed security be altered prior to the principal-amortization period?
(d) Why is the monthly payment rate an important measure to examine when considering investing in a credit card receivable-backed security?