pass-through security
- A type of investment that entails the holder owning a portion of a group of debt payments. These payments, including interest and principal, are collected from the debtor and funneled to the investor via a middle entity, often a bank
- The investor decided to diversify his portfolio by investing in a pass-through security, allowing him to gain profit from the pool of loan repayments.
- A pass-through security can be a valuable investment option, especially when the debt obligations are tied to secure assets such as mortgages.
- With a pass-through security, the bank that originated the loans collects the payments and passes them through to the investors.
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