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What is a Collateralized Bond Obligation? – Definition, Understanding, Differences, and More

collateralized Bond Obligation

Collateralized Bond Obligation (CBO) – Definition

A collateralized Bond Obligation (CBO) investment-grade bond backed by a pool of junk bonds. And junk bonds its typically not investment grade.

It because the pool includes several types of credit quality bonds together from multiple issuers. They offer enough diversification it structures as “investment grade.”

And collateralized bond obligations are similar in structure to the collateralized mortgage obligation (CMO).

But different in that CBOs represent different credit risk levels from bond issuers, not from a pool of mortgages.

How Understanding the Collateralized Mortgage Obligations (CMO)?

What are the Differences between Collateralized Mortgage Obligations and Collateralized Debt Obligations?

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What is Collateralized Mortgage Obligations and the Global Financial Crisis?

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