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A firm issued a structured asset consisting of a €100 million equity tranche, €200 million junior debt tranche, and a €300 million senior debt tranche that support a €600 million portfolio. If the portfolio generates €300 million in losses, identify the order in which portfolio losses will be absorbed. A. The senior debt tranche will absorb €150 million, the junior debt tranche will absorb €100 million, and the equity tranche will absorb €50 million of losses. B. Each tranche will absorb €100 million of losses. C. The equity tranche will absorb the first €100 million of losses, and the junior debt tranche will absorb the next €200 million of losses. D. The senior debt tranche will absorb the entire €300 million loss. |