Posts Tagged ‘derivatives’
The Anatomy of a CDO
Monday, April 13th, 2009
The Anatomy of a CDO
by: Kendrick Chua
During last year’s subprime crisis, this three-letter financial jargon often sprung into interviews and conversations. It made its way into the headlines of the newspapers and crept their way into investors’ nightmare. When before it was just Freddie Kruger, now it is the CDO.
CDO is an acronym for Collateralized Debt Obligation, an asset-backed security and investment in CDO is an investment in the cash flow of its asset. To understand this further, we need to backtrack a little bit as to why this thing was ever created by the bright boys of Wall Street.
Tags: derivatives, subprime
