A collateralized debt obligation is a complex structured finance product that is backed by a pool of loans and other assets. These underlying assets serve as collateral if the loan goes into default. The tranches of CDOs indicate the level of risk in the underlying loans, with senior tranches having the lowest risk.

CDO-Squared is a collateralized debt obligation backed primarily by the tranches issued by other CDOs. These instruments became popular before the financial crisis of 2007–08.

Collateralized debt obligations (CDOs) are a type of structured investment finance product that contain various assets and loan products. Investment banks package bank loans, mortgages, and other assets into collateralized debt obligations—similar to funds—for institutional investors to buy.

Synthetic CDOs do not own cash assets like bonds or loans. Instead, synthetic CDOs gain credit exposure to a portfolio of fixed income assets without owning those assets through the use of credit default swaps, a derivatives instrument.