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      Question

      A security that repackages individual fixed-income

      assets into a product that can be chopped into pieces and then sold on the secondary market is called
      A Credit Options Correct Answer Incorrect Answer
      B Credit Default Swap Correct Answer Incorrect Answer
      C Mortgage Based Security Correct Answer Incorrect Answer
      D Collateralized Debt Obligations Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      A collateralized debt obligation (CDO) is a structured financial product that pools together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors. A collateralized debt obligation is named for the pooled assets โ€” such as mortgages, bonds and loans โ€” that are essentially debt obligations that serve as collateral for the CDO.

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