Asset-Backed Security (ABS)
An asset-backed security (ABS) is a fixed-income security whose cash flows come from a pool of underlying assets—such as auto loans, credit card receivables, or student loans—rather than from the issuer's general obligation.
Example: Example: A bank pools auto loan receivables and issues an ABS with senior and junior tranches; investors receive payments from the pool's loan repayments according to the tranche waterfall.
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