Tranching allows packages of reliable,low-risk mortgages could be sold to ______________,while higher-risk subprime mortgages could be sold to ___________.

Question

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Tranching allows for the separation of mortgages into different levels of risk. Packages of reliable, low-risk mortgages (typically prime mortgages) are sold to more risk-averse investors, while higher-risk subprime mortgages are sold to risk-loving investors who are willing to take on more risk for the potential for higher returns.

Tranching Allows Packages of Reliable,low-Risk Mortgages Could Be Sold to ______________,While