A ________ pays out cash flows from subprime mortgage-backed securities in different tranches, with the highest-rated tranch paying out first, while lower ones paid out less if there were losses on the mortgage-backed securities.

Question

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The description given is of a collateralized debt obligation (CDO), which is a type of structured financial product that pools together various assets, such as subprime mortgage-backed securities, and then separates these assets into different tranches with varying levels of risk and return. The highest-rated tranche receives payment priority over lower-rated tranches, making it less risky and more valuable.

A ________ Pays Out Cash Flows from Subprime Mortgage-Backed Securities