Collateralized Debt Obligation
What is Collateralized Debt Obligation?
A Collateralized Debt Obligation (CDO) is a synthetic financial product made up of a number of loans that have been packaged and are offered for sale in the market by the lender. The original borrower may, in theory, be required to pay back the borrowed sum to the holder of the collateralized debt obligation at the conclusion of the loan term. Due to the fact that the price of a collateralized debt obligation (CDO) (at least conceptually) depends on the price of another asset, CDOs are a sort of derivative security.