Respuesta :
A structured product that invests in tranches of private label subprime mortgages is a CDO.
What is meant by collateralized debt obligation?
A pool of loans and other assets serve as the collateral for the intricately designed financial product known as a collateralized debt obligation.
If the loan defaults, the underlying assets act as collateral. CDOs are a practical tool for transferring risk and freeing up resources, while being risky and not suitable for all investors.
What Is a Collateralized Debt Obligation (CDO)?
A CDO is a structured vehicle that makes investments in subprime private-label mortgage tranches.
A complicated structured financial product called a collateralized debt obligation (CDO) is offered to institutional investors and is backed by a collection of loans and other assets.
Her areas of expertise include real estate, investing, and personal finance. Although they commonly overlap, mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) are essentially two independent financial instruments.
Therefore, the correct answer is option b) cdo.
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