A ________ pays out cash flows from a collection of assets in different tranches,with the highest-rated tranch paying out first,while lower ones paid out less if there are losses on the underlying assets.
A)collateralized debt obligation (CDO)
B)adjustable-rate mortgage
C)negotiable CD
D)discount bond

Question

Quizplus · Accepted Answer

This describes a collateralized debt obligation (CDO), which is structured as different tranches with varying levels of credit risk. The highest-rated tranches receive priority in receiving cash flows, while lower-rated tranches may receive less if there are losses on the underlying assets.

A ________ Pays Out Cash Flows from a Collection of Assets