ACI
3I0-012 · Question #228
3I0-012 Question #228: Real Exam Question with Answer & Explanation
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Question
What happens when the issuer of a bond being used as collateral in a classic repo fails to pay a coupon on the bond during the term of the repo?
Options
- AThe transaction is terminated and the collateral is returned to the seller
- BThe transaction is rolled over until the coupon is paid or the issuer becomes insolvent, at which point
- CThe buyer is obliged to make a manufactured payment to the seller and becomes an unsecured creditor
- DThe buyer is not obliged to make a manufactured payment to the seller but the buyer is likely to ask
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