What is structured finance and which parties are involved?

Question

Accepted Answer

Structured finance refers to complex financial instruments that are created by pooling together various financial assets.

Structured finance involves the creation of securities that are backed by a pool of assets such as mortgages, loans, or bonds.
These securities are then sold to investors who receive payments based on the cash flows generated by the underlying assets.
Structured finance can be used to manage risk, raise capital, and create customized investment opportunities.
Examples of structured finance instruments include collateralized debt obligations (CDOs), asset-backed securities (ABS), and mortgage-backed securities (MBS).

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