No. Basic knowledge of fixed income and risk-return principles is sufficient. The simulation introduces key ABS concepts through structured onboarding.
Asset Backed Securities Simulation
Students structure, price, and analyze securities backed by real-world cash flows - grappling with risk, return, and creditworthiness - in our Asset-Backed Securities Simulation.
Asset Backed Securities Simulation Overview
The Asset-Backed Securities Simulation places students in the role of securitization analysts and structurers within a financial institution. Their task: to transform pools of assets - such as auto loans, credit card receivables, or mortgages - into investment-grade securities with distinct tranches, risk profiles, and yields.
Created by structured finance professionals and academic experts, this simulation introduces students to the practical complexities of securitization. They must assess asset quality, model cash flows, allocate risk, and present a structure to both investors and credit committees.
The simulation bridges finance theory with real-world structuring, regulation, and investor psychology, giving students exposure to one of the most consequential innovations in capital markets.
Asset Backed Securities Simulation Concepts
The simulation gives students a deep dive into structured finance, covering:
- Securitization Process: From asset pool selection to security issuance
- Tranching and Credit Enhancement: Senior/subordinate structures, overcollateralization, excess spread, and reserve accounts
- Cash Flow Modeling: Amortization, prepayment risk, and default scenarios
- ABS Types: Auto loans, credit cards, residential mortgages, student loans
- Yield and Pricing: IRR by tranche, credit spreads, time to maturity
- Credit Ratings and Risk Transfer: Rating agency criteria and regulatory capital treatment
- Investor Considerations: Risk appetite, return targets, and portfolio fit
Gameflow
What Students Do
In this simulation, students take on the role of a securitization team preparing an ABS issuance. Across multiple simulation stages, they will:
- Analyze an asset pool’s credit quality, default history, and cash flow characteristics
- Structure the security into tranches with varying levels of risk and return
- Apply credit enhancement techniques to improve ratings
- Run scenarios for prepayment, delinquency, and macroeconomic stress
- Price each tranche based on investor appetite and risk profiles
- Prepare and present the structure to internal stakeholders or external investors
What Students Learn
The simulation brings structured finance concepts to life, helping students:
- Understand how asset-backed securities are created, priced, and sold
- Analyze risk and return trade-offs in tranche structuring
- Model repayment, default, and prepayment behavior
- Appreciate investor needs and regulatory constraints in securitized products
- Communicate complex financial structures in clear, persuasive language
- Reflect on the role of securitization in expanding credit access—and financial crises
Why This Asset Backed Securities Simulation Works
ABS and structured products can seem opaque - this simulation makes them concrete, strategic, and practical.
By tasking students with making real structuring decisions under data and time pressure, the simulation helps them internalize the tensions between investor yield, credit protection, and structural complexity. It also surfaces ethical, regulatory, and systemic risk considerations embedded in these instruments.
Perfect for advanced finance, structured products, or capital markets courses, this simulation delivers the clarity and confidence students need to navigate the world of securitization.