CDO managers raises capital through the issuance of rated CDO debt and equity to purchase an undiversified pool of credit instruments.

Question

Quizplus · Accepted Answer

CDO managers typically aim to create diversified pools of credit instruments, not undiversified ones. Additionally, while CDO debt and equity may be issued to raise capital, they are typically not used to purchase an undiversified pool of credit instruments.

CDO Managers Raises Capital Through the Issuance of Rated CDO