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Basic Question 2 of 4
Select the correct statement(s) regarding a CDO.
II. The majority of the underlying collateral typically pays a fixed rate.
III. The equity tranche receives a floating-rate payment.
IV. The junior tranche receives a floating-rate payment.
I. To offer sufficient protection, over 50% of the deal is structured as either equity or junior tranches; the senior tranche is less than 50%.
II. The majority of the underlying collateral typically pays a fixed rate.
III. The equity tranche receives a floating-rate payment.
IV. The junior tranche receives a floating-rate payment.
User Contributed Comments 1
| User | Comment |
|---|---|
| quanttrader | only senior tranche recvs floating |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe collateralized debt obligations, including their cash flows and risks
CFA® 2025 Level I Curriculum, Volume 4, Module 18.