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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 — such as mortgages, bonds and loans — that are essentially debt obligations that serve as collateral for the CDO.

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