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LOS j: Describe collateralized debt obligations.ffice ffice" />
Q1. 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) spread CDO.
B) arbitrage CDO.
C) balance sheet CDO.
Correct answer is 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. Spread CDO is a fabricated term.
Q2. A debt security that is collateralized by emerging market debt would be a(n):
A) CMO.
B) CDO.
C) MTN.
Correct answer is 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. A CMO (collaterized mortgage obligation) is a debt obligation that is backed by mortgages.
Q3. A debt security that is collateralized by various corporate bonds would be a(n):
A) TIP.
B) CDO.
C) CMO.
Correct answer is 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. A CMO (collaterized mortgage obligation) is a debt obligation that is backed by mortgages.
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发表于 2009-3-2 16:52
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