LOS j: Describe collateralized debt obligations.
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.
Q2. A debt security that is collateralized by emerging market debt would be a(n):
A) CMO.
B) CDO.
C) MTN.
Q3. A debt security that is collateralized by various corporate bonds would be a(n):
A) TIP.
B) CDO.
C) CMO.
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