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Collateralized Debt Obligations (CDOs) are complex financial instruments that pool various debt securities and slice them into tranches with varying risk and return profiles. Synthetic CDOs use credit derivatives instead of actual debt. The 2008 crisis was partly fueled by risky CDOs, especially those with poor underwriting standards. JP Morgan's Leveraged synthetic CDOs were criticized for exacerbating the crisis. Understanding CDOs' risks is crucial for investors and regulators.

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