Question

Which of the following best describes the cash flow that owners of credit card receivable-backed securities receive during the lockout period?

1) No cash flow
2) Regular cash flow
3) Irregular cash flow
4) High cash flow

Answer 1

Owners of credit card receivable-backed securities do not receive any cash flow during the lockout period.

Step-by-step explanation:

The cash flow that owners of credit card receivable-backed securities receive during the lockout period is No cash flow.

During the lockout period, which is a specified period of time after the issuance of the security, the owners do not receive any cash flow. This means that they do not receive any regular or irregular payments during this period.

This is because the lockout period is designed to protect the interests of investors by ensuring that the funds received from the underlying credit card receivables are used to pay off the principal balance of the security before any cash flow is distributed to the owners.