How Are Losses Distributed Among Tranches in a CDO?

1 month ago 20

Losses Distributed Among Tranches in a CDO

Collateralized Debt Obligations (CDOs) are like complex puzzles in the financial world, with pieces called tranches that fit together to balance risk and reward. But how do these tranches handle losses? Understanding the distribution of losses across these layers is crucial for investors. Let’s dive into how each tranche absorbs financial shocks, from the riskiest […]

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