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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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