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A collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS). [1] Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing mortgage-backed securities (MBS).
CDO-Squared is an investment in the form of a special-purpose entity (SPE) with securitization payments backed by collateralized debt obligation tranches. A collateralized debt obligation is a product structured by a bank in which an investor buys a share of a pool of bonds , loans , asset-backed securities , and other credit instruments.
The "financial engineering" of the new "private-label" asset-backed securities—such as subprime mortgage-backed securities (MBS), collateralized debt obligations (CDO), "CDO-Squared", and "synthetic CDOs"—made them "harder to understand and to price" and became a profit center for rating agencies. [31]
Massachusetts Financial Services [4] ARCap [4] Capital Trust [4] CWCapital [4] Marathon Asset Management [4] Guggenheim Structured Real Estate [4] Teachers Insurance [4] Arbor Realty [4] Goldman Sachs [4] Maples Finance [4] Wrightwood Capital [4] JE Robert Cos [4] Brascan Real Estate Financial Partners [4] CBRE Realty Finance [4] Legg Mason ...
Critically, in assessing a company's financial position (and reading its balance sheet), COE is distinguished from CAPEX, or costs associated with Capital Expenditures. [ 7 ] [ 8 ] Ke is most often used in the Capital Asset Pricing Model (CAPM), in which Ke = Rf + ß(Rm-Rf).
In the second case, an "asset-backed security" – or at least the abbreviation "ABS" – refers to just one of the subsets, one backed by consumer-backed products, and is distinct from a MBS or CDO, (example: "As a rule of thumb, securitization issues backed by mortgages are called MBS, and securitization issues backed by debt obligations are ...
A synthetic CDO is a variation of a CDO (collateralized debt obligation) that generally uses credit default swaps and other derivatives to obtain its investment goals. [1] As such, it is a complex derivative financial security sometimes described as a bet on the performance of other mortgage (or other) products, rather than a real mortgage security. [2]
A typical single-tranche CDO is a note issued by a bank or an SPV where in addition to the credit risk of the issuing entity, the investors take credit risk on a portfolio of entities. In return for taking this additional credit risk on the portfolio, the investors achieve a higher return than the market interest rate for the corresponding ...