A complex structured financial product backed by a pool of loans and other assets, divided into tranches with different risk levels and returns. Senior tranches receive payment priority while junior tranches bear first losses.
From Medieval Latin 'collateralis' (side by side), Latin 'debitum' (debt), and 'obligatio' (binding). CDOs evolved from mortgage-backed securities in the 1980s as Wall Street created increasingly complex ways to repackage debt.
Try Another Word