Answer: reinvesting principal repayments during the lockout period.

**Explanation:** - **Option A** is incorrect because credit card receivable ABS are backed by non-amortizing loans, which do not involve scheduled principal repayments. As a result, these securities are not subject to prepayment risk. - **Option B** is incorrect for the same reason as Option A. Non-amortizing loans, such as those backing credit card receivable ABS, do not involve scheduled principal repayments, so they are not collateralized by fully-amortizing loans. - **Option C** is correct. During the lockout period, the cash flows distributed to security holders are based solely on finance charges and fees collected. Principal repayments made by cardholders are reinvested during this period. Once the lockout period ends, these principal repayments are distributed to investors instead of being reinvested. This question tests the understanding of the characteristics and cash flow mechanics of non-mortgage asset-backed securities, specifically credit card receivable ABS.

Author: LeetQuiz Editorial Team