Saturday, August 20, 2011

How Does a Collateralized Debt Obligation (CDO)Work?

CDO’s were blamed for a lot of the financial crisis in 2008, and the global recession that followed.

At SUU, our finance people don’t do a good job of explaining these instruments.

Here’s a good primer that serves two purposes: 1) it predates the crisis, and yet points out that even then people who should know better were pretending these things were snake oil when their investments didn’t work as planned, and 2) it has a short explanation of how they’re put together.

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