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Subprime RMBS issues usually contain an available funds cap (AFC) to protect the issues from interest rate risk. The AFC is required because subprime RMBS bonds are: A. fixed rate securities, but subprime mortgages have a floating rate after the initial period is over. B. referenced to US treasury rates and subprime RMBS bonds are referenced to LIBOR. C. overcollateralized by issuing less RMBS bonds than underlying mortgages. D. floating rate securities, but subprime mortgages have a fixed rate during the initial period. |