4. An ABS, based on portfolios of subprime mortgages, consists of a senior tranche (owed 25% of the cash flow), a mezzanine tranche (owed 35%) and an equity tranche (owed 40%). The mezzanine tranche is itself an ABS CDO with a senior tranche (owed 10% of the cash flow), a mezzanine tranche (owed 50%) and an equity tranche (owed 40%). If the subprime portfolios incur a loss of 60%, what are the percent losses to each tranche of the ABS and the ABS CDO? ABSs Assets Senior tranche (80%) AAA ABS CDO Mezzanine tranche (15%) BBB Senior tranche (65%) AAA Mezzanine tranche (25%) BBB Equity tranche (5%) Not rated Equity tranche (10%)