问题如下：
Which of the
following statements related to securitization is correct?
选项：
A. Time tranching
addresses the uncertainty of a decline in interest rates.
B. Securitizations are
rarely structured to include both credit tranching and time tranching.
C.
Junior and
senior bond classes differ in that junior classes can only be paid off at the bond’s set maturity.
解释：
A is correct. Time tranching is the creation of bond classes that possess different expected maturities so that prepayment risk can be redistributed among bond classes. When loan agreements provide borrowers the ability to alter payments, in the case of declining interest rates, this prepayment risk increases because borrowers tend to pay off part or all of their loans and refinance at lower interest rates.
B is incorrect because it is possible, and quite common, for a securitization to have structures with both credit tranching and time tranching.
C is
incorrect because the subordinated structures of junior and senior bond classes differ as to how they will share any
losses relative to defaults of the borrowers whose loans are in the collateral
pool. Junior classes offer protection for senior classes, with losses first
realized by the former. The classes are not distinguished by scheduled
repayment terms but, rather, by a loss sharing hierarchy in the event of borrower default.
