CDOs:
A) Are illegal.
B) Are collateralized debt obligations.
C) Are not securities.
D) Could not be hedged.

Question

Quizplus · Accepted Answer

CDO stands for Collateralized Debt Obligation. It is a financial instrument that pools together various types of debt such as mortgages, credit card debt, and student loans, and then packages them into one investment product. This product is then sold to investors who earn profits based on the interest and principal payments made by the underlying borrowers. Therefore, option B is the correct answer.