为什么是equity

问题如下：

Which investor tranche plays a key role in determining CLO viability?

选项：

A.

Senior

B.

Equity

C.

Mezzanine

解释：

The correct answer is B. Investors in equity tranches take on equity-like risks with the potential to earn returns comparable to equities. Moreover, these residual tranche investors play a key role in whether a CLO is viable or not; the CLO structure has to offer competitive returns for this tranche. Facing these risk/return possibilities puts them in the position of the marginal, price-setting investors.

A and C are incorrect because they are promised fixed returns without reference to the underlying performance of the collateral pool. They are also exposed to less risk in having seniority payoff preference in case of default.