Explanation:
The delinquency ratio for credit card ABS is commonly calculated as the ratio of receivables past due for a significant period (often 90+ days, which generally signals default for this asset class) to the total receivables.
Total receivables = $25,200,000 + $8,250,000 + $2,750,000 + $1,300,000 = $37,500,000.
Delinquency Ratio = Receivables over 90 days past due / Total Receivables = $1,300,000 / $37,500,000 = 0.03466 or 3.47%.
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Q.12 An ABS based on credit card receivables has the following composition:
| Current receivables | $25,200,000 |
| Receivables over 30 days past due | $8,250,000 |
| Receivables over 60 days past due | $2,750,000 |
| Receivables over 90 days past due | $1,300,000 |
Calculate the delinquency ratio of the ABS.
A
2.93%
B
3.47%
C
5.16%
D
7.33%
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