Collateralised Debt Obligations (CDOs) were responsible for significant damage and disruption to global financial markets as:

Question

Quizplus · Accepted Answer

CDOs were based on the cash flows from other financial securities such as mortgage-backed securities, rather than from real assets such as property or businesses. This made it difficult for investors to assess the true value and risk associated with these securities. Additionally, rating agencies gave inflated ratings to many CDOs, leading investors to believe they were safer investments than they actually were. These factors contributed to the damage and disruption caused by CDOs in global financial markets.

Collateralised Debt Obligations (CDOs) Were Responsible for Significant Damage and Disruption