is part of the NAIC security insurer provisional exemption rules: A. Optionality Test: for corporate and municipal issuesprincipal and interest must be paid in US dollarscontract terms state that principal is repayable in full and the principal repayment schedule is fixed. Further the principal is set at closingfixed in US dollars and coupon payments cannot be less than zero in any period. B. Optionality Test: for Asset-Backed/Residential Mortgage-Backed securitiesthe principal and interest must be paid in US dollarsand the coupon payment cannot be less than zero in any payment period. In additionwith the exception for credit enhancementsthe timing and amount of cash flows to pay the obligation must depend on the timing and amount of cash flow from the assets underlying the bond. If the bond is prepaid immediatelythe insurer must receive at least 98% of the purchase price.

This definition is in context to Accounting. See more contextual defintions for Optionality Test.