A Collateralized Default Obligation (CDO) Is a Pool of Securities

question 16

Multiple Choice

A collateralized default obligation (CDO) is a pool of securities (collateral) whose cash flows are tranched and sold to investors who take different levels of credit loss in the portfolio. Which of the following is the least likely to be seen in a the collateral of a CDO.

• A) A portfolio of equities.
• B) A portfolio of bonds.
• C) A portfolio of CDS.
• D) A portfolio of CDOs.

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Definitions:

Democrats

A member or supporter of the Democratic Party, one of the two major contemporary political parties in the United States.

Variance

A measure of how much values in a data set differ from the mean of the data set.

Null Hypothesis

A statistical hypothesis that assumes no significant difference or relationship exists between certain characteristics or variables.

One-way ANOVA

A statistical test that compares the means of three or more independent groups using variance analysis.