Synthetic Collateralized Debt Obligation

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Synthetic Collateralized Debt Obligation

A collateralized debt obligation that invests in credit default swaps. This investment can lead to large returns for holders of the CDO; however, the nature of credit default swaps may leave the holders liable for more than their initial investments, should there be significant changes in the credit default swaps.
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References in periodicals archive ?
There are, for example, beauties Margot Robbie and Selena Gomez, in cameo roles, talking straight to the camera and explaining subprime mortgages and synthetic collateralized debt obligations (CDOs), respectively.
In one of the cameos, helping pop singer-actress Selena Gomez shed light on synthetic collateralized debt obligations, Richard Thaler, behavioral economist at the University of Chicago, offers a blackjack analogy.
When the supply of mortgages began to dry, the industry created a non-traded security based not on actual mortgages, but on the insurance against default of the securities (synthetic collateralized debt obligations).