Reading 64: Overview of Bond Sectors and Instruments - LO

答案和详解如下：

1.A debt security that is collateralized by various corporate bonds would be a(n):

A)    TIP.

B)    CDO.

C)    ABS.

D)    CMO.

The correct answer was B)

A CDO (collaterized debt obligation) is a debt obligation that is backed by an underlying diversified pool of business loans, mortgages, emerging market debt, corporate bonds, asset-backed securities, or non-performing loans. A TIP is a Treasury Inflation-Protected Security. An ABS (asset-backed security) is a debt obligation that is backed by credit card debt, auto loans, bank loans, and corporate receivables. A CMO (collaterized mortgage obligation) is a debt obligation that is backed by mortgages.

2.A debt security that is collateralized by emerging market debt would be a(n):

A)    MTN.

B)    CDO.

C)    ABS.

D)    CMO.

The correct answer was B)

A CDO (collaterized debt obligation) is a debt obligation that is backed by an underlying diversified pool of business loans, mortgages, emerging market debt, corporate bonds, asset-backed securities, or non-performing loans. A MTN is a medium-term note issued by a corporation. An ABS (asset-backed security) is a debt obligation that is backed by credit card debt, auto loans, bank loans, and corporate receivables. A CMO (collaterized mortgage obligation) is a debt obligation that is backed by mortgages.

3.A CDO issued to profit on the spread between the return on the underlying assets and the return paid to investors is referred to as a(n):

A)    balance sheet CDO.

B)    arbitrage CDO.

C)    spread CDO.

D)    differential CDO.

The correct answer was B)

A CDO (collaterized debt obligation) issued to profit on the spread between the return on the underlying assets and the return paid to investors is referred to as an arbitrage CDO. A balance sheet CDO is created by a bank or insurance company wishing to reduce their loan exposure on the balance sheet. The other types of CDOs are fabricated terms.