Asset backed security. An ABS is a type of debt security backed by a pool of underlying assets or collateralised by the cash flows from a specific pool of underlying assets. The asset pools can be constructed from many types of receivables including (but not limited to) mortgages, credit card payments, auto loans etc. Typically, the underlying assets are illiquid and private in nature, but by combining them in a large and diversified pool and segmenting the securities into tranches, they become marketable securities. The most common type of ABS is a residential mortgage backed security (RMBS)

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