Ask the Piggy Bank: What are CDOs?

Yesterday’s post on the financial sector prompted a comment about some of the confusion coming from financial sector jargon, more specifically, CDOs. Indeed, Jean’s comment was not the only question I received about these products that can sap a financial sector company of earnings when they head south. So I thought it would be a good idea to address them.
CDO: Collateralized Debt Obligation
A CDO is basically an investment that is backed by debt. This debt can include one or more of the following sources: bonds, loans and other assets that have collateral. Mortgage loans (including subprime loans) have been popular …read more