The securitization of subprime loans works by dividing pools of credit into classes, or tranches, separated by the amount of risk each class represents.

Name: The securitization of subprime loans works by dividing pools of credit into classes, or tranches, separated by the amount of risk each class represents.
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This is accurate. Tranches are separated by the amount of risk they represent, with the riskiest tranches generally offering higher potential returns but also a greater chance of default.

The Securitization of Subprime Loans Works by Dividing Pools of Credit