Tranche

From MarketsWiki
Revision as of 16:12, 21 December 2011 by JohnJLothian (talk | contribs)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Jump to navigation Jump to search


RCGLogo-400px.jpg


"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.

References[edit]