EduMarkets Securitised Products

The securitised products module covers the mechanics banks use to turn illiquid loans into securities that can be sold. Users walk through the pooling of mortgages, the slicing of cashflows into tranches, and how each tranche is sold to a different kind of investor. They trace the waterfall and see how losses cascade through the tranches from equity up to senior. Prepayment risk is covered separately: a borrower's option to repay early changes the timing of the pool's cashflows.