CDO

A Collateralized Debt Obligation (CDO) is a financial product that pools together various debt instruments, such as loans or bonds, and then divides this pool into different parts called tranches. Each tranche has a different level of risk and return, allowing investors to choose based on their risk tolerance. The CDO is managed by a team that assembles and sells these tranches. Essentially, it transforms a collection of debts into securities that can be sold to investors, helping lenders free up capital and offering investors a range of risk options, though it can be complex and risky depending on the underlying assets.