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Collateralized Debt Obligations (CDOs) are complex financial instruments that pool various debt assets and slice them into tranches with varying risk levels. Bespoke CDOs allow investors to customize their portfolios. Synthetic CDOs use credit derivatives. The 2008 crisis was partly fueled by risky CDOs, especially those with subprime mortgages. The '8-4 Billion Bet' refers to a large, failed investment in CDOs.

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