What Is a Collateralized Debt Obligation (CDO)? - TheStreet Definition

Dictionary of Financial Terms

CDOs are a kind of asset-backed security, holding a pool of collateralized debt (such as mortgages and auto loans) that may be subdivided into various tranches (representing different levels of risk). These securities were born in the 1980s, but became famous (or, more to the point, infamous) during the housing bust of 2007.

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