Tranches in securitization
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When talking about securitization "tranches" always come up. what are they ? and what purpose do they serve?
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It will be the same but the cash flows vary accordingly, the same as happening with LIBOR.
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What happens if the assets that are being securitized are not on fixed rate but rather float? Do they use the same technique as you showed?
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Great video but in your last example the coupon received by the senior tranche (10%) should be inferior to that received by the subordinated tranche (2%)
fth9110 1 year ago
@fth9110 yes, agreed: the subordinated tranche should have the higher coupon. Nice catch! Thank you, David
bionicturtledotcom 1 year ago