In Regards to a CDO Structure, Which of the Below

question 34

Multiple Choice

In regards to a CDO structure, which of the below statements is TRUE?

• A) In a CDO structure, there is a collateral manager responsible for managing the portfolio of debt obligations.
• B) The portfolio of debt obligations in which the collateral manager invests is referred to as the portfolio.
• C) The individual issues held that comprise the collateral are referred to as the collateral liabilities.
• D) These debt obligations are referred to as tranches or bond classes. The tranches include: junior tranches, mezzanine tranches, and equity tranche

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Definitions:

Deadweight Losses

Economic inefficiencies that occur when equilibrium in a market is not achieved or when market allocation of resources is not optimal, often due to externalities or government intervention.

Consumer Surplus

A rephrased definition: The economic benefit that consumers receive when they can purchase a product for less than the maximum price they are willing to pay.

Consumer Surplus

The gap between the overall sum consumers are ready and able to spend on a product or service and what they really spend.

Cognitive Dissonance

A psychological discomfort experienced when simultaneously holding two or more conflicting beliefs, ideas, or values.