Pass-through securities are financial instruments that allow investors to receive payments from a pool of underlying assets, such as mortgages or loans. These securities are created when a group of loans is bundled together, and the cash flows from the borrowers are passed through to the investors. This means that investors receive a share of the principal and interest payments made by the borrowers. One common type of pass-through security is a mortgage-backed security (MBS), which is backed by a collection of home mortgages. Investors in pass-through securities benefit from regular income, but they also face risks, such as prepayment risk, where borrowers pay off their loans early, affecting the expected cash flows.