When an issuer of securitized loans divides them into different risk classes or tranches,they are providing an:

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Dividing securitized loans into different risk classes or tranches is an example of internal credit enhancement. This is because the issuer is creating different layers of default risk, with higher rated tranches having priority in receiving payments from the underlying loans. This provides additional protection to lower rated tranches, making them more attractive to investors.

When an Issuer of Securitized Loans Divides Them into Different