what is an example of a tranche 
an example of a tranche is as follows hundreds of mortgages are pooled into a security a mortgage backed security mbs the mortgages in this security all have different credit profiles based on the holder of the mortgage some have excellent credit profiles and the mortgages therefore have low interest rates some of the borrowers have bad credit profiles and their mortgages have high interest rates these different mortgages are broken down into tranches each tranche represents a different credit profile the low risk mortgages go into the senior tranche whereas the high risk mortgages go into the junior tranche an investor can choose which tranche they would like to invest in based on their risk profile 