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What is a Collateralized Debt Obligation? Table of contents What is a Collateralized Debt Obligation? How does Collateralized Debt Obligation (CDO) Work? These assets are divided into tranches with different levels of risk and return, and cash flows from the underlying assets are used to pay investors.
As examples: Make sure your inventory and asset records align with what is physically there. Strengthen your ratios: working capital, debt-to-equity, “quick,” price-to-earnings, return on equity, etc.
This financial instrument is commonly used by creditors who are not sure of getting back the money from the borrowers and wants to offset the risk of default. It refers to the possibility that the lender may not receive the debt's principal and an interest component, resulting in interrupted cash flow and increased cost of collection.
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