A synthetic CDO is a variation of a CDO (collateralized debt obligation) that generally uses credit default swaps and other derivatives to obtain its ...
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What is a synthetic CDO structure?
A synthetic CDO is a financial product that invests in non-cash assets such as swaps, options, and insurance contracts to obtain exposure to a portfolio of fixed-income assets. It is one kind of collateralized debt obligation (CDO).
What is the difference between a cash CDO and a synthetic CDO?
While the underlying assets of regular CDOs are traditional fixed-income assets, such as loans, mortgages, and bonds, synthetic CDOs use non-cash assets as the underlying asset, such as credit default swaps, options, and other such contracts. Synthetic CDOs typically offer higher yields than traditional CDOs.
Why were synthetic CDOs bad?
Synthetic CDOs have been criticized for serving as a way of hiding short position of bets against the subprime mortgages from unsuspecting triple-A seeking investors, and contributing to the 2007-2009 financial crisis by amplifying the subprime mortgage housing bubble.
What is the difference between ABS and CDO?
An ABS is a type of investment that offers returns based on the repayment of debt owed by a pool of consumers. A CDO a version of an ABS that may include mortgage debt as well as other types of debt. These types of investments are marketed mainly to institutions, not to individual investors.
A collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS). Originally developed as instruments for the corporate debt ...
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A synthetic CDO is a collateralized debt obligation that invests in credit default swaps or other non-cash assets to gain exposure to fixed income.
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A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the ...
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The shadow banking system is a term for the collection of non-bank financial intermediaries (NBFIs) that legally provide services similar to traditional ...
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The housing bubble preceding the crisis was financed with mortgage-backed securities (MBSes) and collateralized debt obligations (CDOs), which initially offered ...
The 2007–2008 financial crisis, or the global financial crisis (GFC), was the most severe worldwide economic crisis since the Great Depression.
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A real CDO has debts (the “D” in “CDO”) that provide the cash flows: mortgages, car loans, student loans, credit card cebt, whatever. A synthetic CDO has ...
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Cagayan de Oro (CDO), officially the City of Cagayan de Oro is a 1st class highly urbanized city in the region of Northern Mindanao, Philippines.
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Dec 23, 2009 · Goldman was not the only firm that peddled these complex securities — known as synthetic collateralized debt obligations, or C.D.O.'s — and then ...