Question

For non-amortizing, non-mortgage asset-backed securities, the lockout period most likely represents when:

a) Investors cannot sell the securities
b) The servicer cannot collect payments
c) The issuer cannot call the securities
d) The underlying assets cannot be refinanced

Answer 1

The lockout period in non-amortizing, non-mortgage asset-backed securities most likely represents when the issuer cannot call the securities.

Step-by-step explanation:

The lockout period in non-amortizing, non-mortgage asset-backed securities most likely represents when the issuer cannot call the securities. During the lockout period, the issuer is not able to retire or repurchase the securities before the agreed-upon maturity date. This protects the investors by ensuring that the issuer cannot prematurely end the investment and prevents potential losses for the investors.