Question

A​ ________ pays out cash flows from a collection of assets in different​ tranches, with the highestminus−rated tranch paying out​ first, while lower ones paid out less if there are losses on the underlying assets.

Answer 1

A CDO pays out cash flows from a collection of assets in different​ tranches, with the highestminus−rated tranch paying out​ first, while lower ones paid out less if there are losses on the underlying assets.
CDO is collateralized debt obligation.It is a type of ABS (asset-backed securities). CDO's are created in tranches and tranches are number of securities offered for a same transaction.