Refers to a loan or other contract that is secured by collateral in the form of property or other assets In the case of a loan, the lender can exercise its right to seize the collateral backing the loan in the event the borrower defaults
a form of securitization where payments from multiple middle sized and large business loans are pooled together and passed on to different classes of owners in various tranches
(Ekonomi) Collateralized debt obligations (CDOs) are a type of structured asset-backed security (ABS) whose value and payments are derived from a portfolio of fixed-income underlying assets. CDOs securities are split into different risk classes, or tranches, whereby "senior" tranches are considered the safest securities. Interest and principal payments are made in order of seniority, so that junior tranches offer higher coupon payments (and interest rates) or lower prices to compensate for additional default risk