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Asset-backed security

Asset-backed security Definition

Asset-backed securities are bonds backed by a pool of financial assets that cannot easily be traded in their existing form. By pooling together a large portfolio of these illiquid assets they can be converted into instruments that may be offered and sold more freely in the capital markets. A mortgage backed security is a special form of an asset backed security. The difference being that an ABS is usually backed by any asset except mortgage, like accounts receivables, credit card debt, or other credit.

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