Tranche

A tranche is a segment or slice of a larger financial deal, like a loan or investment package, designed to meet different investors' needs. Think of it as dividing a big project into parts, each with its own features such as risk level, return, or maturity date. For example, in a mortgage-backed security, some tranches might offer safer, lower returns, while others are riskier but could pay more. This structure helps distribute risk and attract investors seeking specific risk-reward profiles, making large, complex financial products more flexible and accessible.