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"Tranche" is a French word meaning "slice" or "portion." In investing, it describes a security that can be split up into smaller pieces and then sold to investors.

Mortgage-backed securities such as a collateralized mortgage obligation are often in the form of a tranche. The securities can be partitioned based on their maturities and sold to investors depending on their preferences.

For example, an investment bank could split a security or asset into parts so that one investor can receive the early cash flows of a mortgage and another can receive the later cash flows.