CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

Senior and subordinate bond classes are used in ______.

A. time tranching
B. capital tranching
C. credit tranching
Correct Answer: C

Senior and subordinate bond classes are used as a form of credit enhancement. Credit tranching structures redistribute the credit risk associated with the underlying collateral and allow investors to choose the amount of credit risk that they prefer to bear.

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