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AfterWorkGuinness
AfterWorkGuinness
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I've read that creatingleverage is created with the tranches inof a cdsCDS index, leverage is created because the more junior tranches have more risk than the index. I get that the more junior the tranche the more the risk, but I don't see how leverage is created (controlling more with less).

I've read that creating tranches in a cds index, leverage is created because the more junior tranches have more risk than the index. I get that the more junior the tranche the more the risk, but I don't see how leverage is created (controlling more with less).

I've read that leverage is created with the tranches of a CDS index because the more junior tranches have more risk than the index. I get that the more junior the tranche the more the risk, but I don't see how leverage is created (controlling more with less).

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AfterWorkGuinness
AfterWorkGuinness
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How does tranching cause leverage?

I've read that creating tranches in a cds index, leverage is created because the more junior tranches have more risk than the index. I get that the more junior the tranche the more the risk, but I don't see how leverage is created (controlling more with less).