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noun 1. Finance.
- one part or division of a larger unit, as of an asset pool or investment: The loan will be repaid in three tranches.
- a group of securities that share a certain characteristic and form part of a larger offering: The second tranche of the bond issue has a five-year maturity.
2. any part, division, or installment: We've hired the first tranche of researchers.
verb (used with object), tranched, tranching. 3. Finance. to divide into parts: tranched debt; A credit portfolio can be tranched into a variety of components that are then further subdivided.
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What is a 0-3 tranche?
A 0-3 tranche refers to a specific segment of a structured finance product, typically in a collateralized debt obligation (CDO) or mortgage-backed security (MBS), where the tranche has the highest priority for receiving payments. This tranche usually has a lower risk of default and, consequently, a lower yield compared to lower-ranked tranches. In the context of credit ratings, a 0-3 tranche may be rated AAA or similar, indicating its perceived safety. Investors in this tranche are typically seeking more stable returns with less exposure to credit risk.
Why is the spread of an equity CDO tranche decreasing with correlation?
When you increase correlation, you are increasing the probability of having very large losses, as well as the probability of having no loss at all. So, you are increasing the probability that senior tranches might experience significant losses but also the probability that the equity tranche is left untouched. As a consequance the spread on the latter decreases.
What is the base correlation in a credit derivative pricing model?
While compound correlation is the correlation found by calibrating the Gaussian copula model to the price of a CDO tranche (for example 3-6%), base correlation is found by calibrating to the price of a first loss tranche, i.e. to the sum of all tranches up to an attachment point (for example 0-6%, the sum of 0-3% and 3-6%). The curve of correlations obtained by calibrating to first loss tranches turns out to be much smoother and more stable than that obtained by calibrating to plain tranches.
What is default correlation?
1. Its the likelihood of a domino effect occurring within a tranche of a CDO. If all the companies in a CDO are in the automobile industry, and one begins to fail and therefore is unable pay its debts, there is a good chance that it might be something in the automobile industry that is causing these companies to falter. Therefore if on company fails, the probability of others failing increases.
What is a first loss tranche in a CDO?
A first loss tranche is the sum of all tranches up to an attachment point. For example, 0-6%, the sum of the 0-3% tranche and the 3-6% tranche, is a first loss tranche.
What is the population of La Tranche-sur-Mer?
La Tranche-sur-Mer's population is 2,691.
What is the area of La Tranche-sur-Mer?
The area of La Tranche-sur-Mer is 17.63 square kilometers.
What is the Name for a block of shares?
tranche
What is a 0-3 tranche?
A 0-3 tranche refers to a specific segment of a structured finance product, typically in a collateralized debt obligation (CDO) or mortgage-backed security (MBS), where the tranche has the highest priority for receiving payments. This tranche usually has a lower risk of default and, consequently, a lower yield compared to lower-ranked tranches. In the context of credit ratings, a 0-3 tranche may be rated AAA or similar, indicating its perceived safety. Investors in this tranche are typically seeking more stable returns with less exposure to credit risk.
What does 'tranche' mean in financial terms?
Tranche is a derivative of the same french word meaning "slice." In financial terms it means a part of a transaction, for example an investment could be divided by tranches and have varying terms and returns depending upon the tranche.
What is the meaning of the word tranche?
Slice or portion
What are the release dates for Tranche de vie - 2005?
Tranche de vie - 2005 was released on: USA: 14 April 2005 (festival screening)
What is the frequency of first tranche return?
Type your answer here... weekly
What is a synonym for raft?
bundle, number, tranche, portfolio, range
What is a block or portion of money for an issue of shares called?
Tranche
Can you have a Super senior tranche of a mezzanine cdo?
no, It would be possible however the only splitting up in tiers was in the junior/equity tranche as these are the ones which carried the most risk and thus the most profit.
