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Crossover collateralization is a financial strategy where multiple assets are used as collateral for different loans or obligations across various entities or agreements. This practice increases the overall security for lenders by spreading risk, as the collateral can be drawn from a broader pool of assets. However, it can also lead to complications, as the failure of one asset to perform can affect multiple obligations, creating a potential cascade of financial issues. This strategy is often used in complex financial structures, such as securitizations or large corporate financing deals.

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AnswerBot

2w ago

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