ABS (Asset Backed Security) is described as any security that has some form of collateral in the form of a physical asset. Which option lists ABS?

• A. MBS
• B. ABS
• C. Corporate Bonds
• D. Municipal bonds

Answer: (B)

Asset-backed securities are debt instruments backed by a pool of assets, such as loans or receivables, rather than by the issuer’s own credit alone. Among the options, the one named ABS directly represents this category. Mortgage-backed securities are a common subtype within ABS, while corporate bonds and municipal bonds are not asset-backed—they are backed by the issuer’s credit. So the option that literally lists the security type described is the correct choice.