are also used for all ABS products. The amount of enhancement necessary to obtain a specific rating for each tranche in an ABS deal is determined by a rating agency after analysis of the collateral and the structure.       BASIS RISK AND FLOATING-RATE ABS   A floating-rate ABS is often exposed to basis risk. This risk is defined as any mismatch between adjustments to the coupon rate paid to bond- holders and the interest rate paid on the floating-rate collateral. Two common sources of basis risk are index risk and reset risk. Index risk is a type of yield curve risk that arises because the ABS floaters coupon rate and the interest rate of the underlying collateral are usually determined at different ends of the yield curve. Specifically, the floaters coupon rate is typically spread off the short-term sector of the yield curve (e.g., U.S. Treasury) while the collaterals interest rate is spread off a longer maturity sector of the same yield curve or in some cases a different yield curve (e.g., LIBOR). This mismatch is a source of risk. For example, for home equity loan-backed securities in which the collateral is adjustable-rate loans, the reference rate for the loans may be 6-month LIBOR while the reference rate for the bonds is usually 1- month LIBOR. Both the collateral and the bonds are indexed off LIBOR, but different sectors of the Eurodollar yield curve. The refer- ence rate for some home equity loans is a constant maturity Treasury. Thus, the collateral is based on a spread off the 1-month sector of the Eurodollar yield curve while the bonds are spread off a longer maturity sector of the Treasury yield curve. As another example, for credit card- backed ABS the interest rate paid is usually a spread over the prime rate (a spread over the Treasury yield curve) while the coupon rate for the bonds is usually a spread over 1-month LIBOR (a spread over the Euro- dollar yield curve). Reset risk is the risk associated with the mismatch between the fre- quency of the resetting of the interest rate on the floating-rate collateral and the frequency of reset of the coupon rate on the bonds. This risk is common for ABS. For home equity loan-backed securities, for example, the underlying collateral for the adjustable-rate loans is either reset semi- annually or annually. However, the coupon rate on the bonds is reset every month. For credit card-backed securities, the coupon rate for the bonds is set monthly, while the finance charges on the outstanding credit card balances are computed daily at a fixed spread over the prime rate.