Valid CFA-Level-I Dumps shared by ExamDiscuss.com for Helping Passing CFA-Level-I Exam! ExamDiscuss.com now offer the newest CFA-Level-I exam dumps, the ExamDiscuss.com CFA-Level-I exam questions have been updated and answers have been corrected get the newest ExamDiscuss.com CFA-Level-I dumps with Test Engine here:
Which of the following is a form of internal credit enhancement?
Correct Answer: A
The senior/subordinate debt structure is an example of an internal credit enhancement. It is common for issuers of debt securities to employ means designed to enhance the credit rating of their debt. There are two general types of credit enhancement - internal and external. External credit enhancement usually comes in the form of bond insurance, a letter of credit, or a corporate guarantee. Internal credit enhancements typically are employedina more complicated form, and include reserve funds, over collateralization, and the senior/subordinate structure of debt securities. MBIA stands for "Municipal Bond Insurance Association," an insuring body that caters to the municipal bond market. Any form of bond insurance is frequently referred to as a "wrap."