Which of the Below Statements Is TRUE

question 69

Multiple Choice

Which of the below statements is TRUE?

• A) A CDO is a security backed by a nondiversified pool of debt obligations.
• B) The CDO collateral manager is not responsible for managing the portfolio of debt obligations.
• C) Collateralized loan obligations and collateralized bond obligations are types of CDOs.
• D) The funds to purchase the assets for a CDO are obtain from the sale of securities and these securities do not include senior tranches, mezzanine tranches, and a subordinate/ equity tranche.

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Definitions:

Binomial Experiment

A statistical experiment that fits the binomial distribution; characterized by having a fixed number of trials, distinct outcomes (success or failure), independence, and constant probability of success.

Variance

A measure of the dispersion or spread of a set of values, indicating how much they differ from the average of the set.

Sample Size

The number of observations or data points collected in a sample from a population for analysis.

Continuous Random

Pertains to a random variable that can take an infinite number of possible values in a continuous range.