Question : Which of the following is not a type of asset-backed security?
Option 1: Mortgage-backed security
Option 2: Collateralized debt obligation
Option 3: Equity shares
Option 4: None of the above
Correct Answer: Equity shares
Solution : The correct answer is (c) Equity shares
Asset-backed securities (ABS) are financial instruments that are collateralized by a pool of underlying assets. The cash flows generated from these assets are used to make payments to the holders of the securities. ABS are typically created from various types of assets such as mortgages, auto loans, credit card receivables, or other types of loans.
Equity shares, also known as common stock or ordinary shares, represent ownership in a company. Unlike asset-backed securities, equity shares do not derive their value from specific underlying assets or debt instruments. Instead, their value is based on the performance and profitability of the company issuing the shares.
Related Questions
Trending Articles/News
.jpg)
.jpg)
