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What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

Posted: March 9th, 2007, 11:02 am
by syaek
Hi,Why is it that a CDO structure creates additional cash flow when compared to the components that are used to build it? For example, a CDO consisiting of 100 bonds (regular coupons + principal ) generates cash flows greater than those associated with the 100 bonds. I.e, the return for the CDO is greater than that of the sum of its parts in bonds.Thanks.

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

Posted: April 10th, 2008, 2:43 pm
by acastaldo
QuoteOriginally posted by: syaekHi,Why is it that a CDO structure creates additional [return] when compared to the components that are used to build it? The answer, of course, is leverage. It creates additional return to the equity tranche when things go well and additional losses when things go badly.From an article by Douglas Lucas, "The Evolving CDO market", (2006):/quotebuyers ofCDO equity receive nonrecourse term financing with leveraged exposure to CDOassets. CDO equity provides nonrecourse financing because CDO equityholdersown stock in a remote entity—the CDO—and are not liable for the losses ofthat entity. Asset financing is in place for up to 15 years, during which time itcannot be withdrawn, the rate cannot change, and under the cash flow creditstructure, a forced liquidation of collateral will not occur. CDO debtholdersprovide the financing for the equityholders, and the equityholders sustain therisk of collateral asset payment delays and credit losses. Equityholders own aleveraged position in the assets of the CDO and receive all cash flows in excessof the debt tranche requirements and thus collect all the upside on the CDO’sassets./end-quotehttp://www.cfapubs.org/doi/pdf/10.2469/op.v2006.n1.4392

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

Posted: November 12th, 2010, 1:19 am
by hamster
QuoteOriginally posted by: SPAAGGFor MBA (master in business - administration) students I add the following :CEO : Chief Executive OfficerCFO : Chief Financial Officerinvestors should be aware that there are a lot of bad apples securitzed... very risky collateral portfolios...

What are ABS, MBS, CBO, CDO, CLO, CMO, CMBS etc. etc. etc.?

Posted: July 12th, 2013, 12:20 pm
by BigAndyD
QuoteOriginally posted by: lawhoQuoteOriginally posted by: marcheHi!do you know what the exotic assets are and its difference with future flows?any one can shed more light on CFXO?tksIt's a foreign exchange CDO