Which of the following statements regarding Collateralized Debt Obligations (CDOs) is FALSE?
A) CDOs experienced rapid growth since the year 2000.
B) The assets used to back the CDOs are substantially diverse.
C) The credit quality within a CDO at the time of issue is diverse.
D) CDOs have generated significant credit and liquidity problems.
E) All of these are correct.

Question

Quizplus · Accepted Answer

All of these statements are true. CDOs did experience rapid growth since the year 2000, the assets used to back them are substantially diverse, the credit quality within a CDO at the time of issue is diverse, and CDOs have been associated with significant credit and liquidity problems, particularly during the 2008 financial crisis.

Which of the Following Statements Regarding Collateralized Debt Obligations (CDOs)