A ________ is a derivative instrument created from bank-originated mortgages and loans,combined with similar debt obligations into a portfolio,and then re-sold through investment banking underwriters to a variety of investors.

Question

Quizplus · Accepted Answer

The definition given matches that of a Collateralized Debt Obligation (CDO). A Credit Default Swap (CDS) is a type of insurance contract on a borrower's debt, a Special Purpose Vehicle (SPV) is a legal entity set up to fulfill a specific purpose, and Arbitrage Pricing Tranch (APT) is a financial model used to evaluate assets.

A ________ Is a Derivative Instrument Created from Bank-Originated Mortgages