Which Statement Regarding a Collateralized Debt Obligation (CDO) Is True

question 46

Multiple Choice

Which statement regarding a collateralized debt obligation (CDO) is true?

• A)A security has no default risk exposure.
• B)A security is tax free.
• C)A security involves a credit default swap.
• D)A security represents a claim on the cash flows of a loan.

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Definitions:

Term Deposit

A type of bank deposit that is held at a financial institution for a fixed term or period of time, often yielding higher interest rates.

Matures

Refers to the final payment date of a financial instrument at which point the principal (and all remaining interest) is due to be paid.

Days

A unit of time measurement that typically represents a 24-hour period.

Loan

Funds lent with the anticipation of repayment plus an additional amount known as interest.