Loan-backed securities pay their purchasers a stream of income that includes both repayments of loan principal and interest.

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Loan-backed securities, such as mortgage-backed securities, are financial instruments that pool together various loans. Investors in these securities receive payments that consist of both the principal repayment from the underlying loans and the interest payments, providing a stream of income.

Loan-Backed Securities Pay Their Purchasers a Stream of Income That