http://dldriver.wordpress.com Just another WordPress.com weblog Wed, 14 Jan 2009 21:46:05 +0000 en hourly 1 http://wordpress.com/ http://s2.wp.com/i/buttonw-com.png http://dldriver.wordpress.com http://dldriver.wordpress.com/2009/01/14/asset-backed-security/ http://dldriver.wordpress.com/2009/01/14/asset-backed-security/#comments Wed, 14 Jan 2009 21:46:05 +0000 dldriver http://dldriver.wordpress.com/?p=3 ]]> In finance, an asset-backed security is a type of  debt security that is based on  assets or collateralized by the cash flows from a specified pool of underlying assets. Assets are pooled to make otherwise minor and uneconomical investments worthwhile, while  reducing risk by diversifying the underlying assets. Securitization makes these assets available for investment to a broader set of investors. In some cases it can be used as credit enhancement by creating a security that has a higher rating than the issuing company which monetizes its assets. This allows it to pay a lower rate of interest than would be possible via a secured bank loan or debt issuance.

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