How did Collateralized Debt Obligation (CDO) put institutional investors, like pension funds, at risk of losing large amounts of money among their pension contributors?

CDO is a kind of derivative, a financial product that combines loans and other assets. It is collateralized as borrowers promise to repay the debt for loans. The assets included in the CDO have different degrees of risk, but due to the presence of highly-rated assets among them, the entire CDO can get an AAA credit rating and ensure its attractiveness. Many CDOs included derivatives from mortgages, but many loans were issued for real estate, and rising prices for it led to defaults in mortgage markets. As a result, the assets forming the basis of the CDO went bankrupt, and institutional investors who bought them suffered financial losses.

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Academic.Tips. (2022) 'How did Collateralized Debt Obligation (CDO) put institutional investors, like pension funds, at risk of losing large amounts of money among their pension contributors'. 9 October.

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Academic.Tips. (2022, October 9). How did Collateralized Debt Obligation (CDO) put institutional investors, like pension funds, at risk of losing large amounts of money among their pension contributors? https://academic.tips/question/how-did-collateralized-debt-obligation-cdo-put-institutional-investors-like-pension-funds-at-risk-of-losing-large-amounts-of-money-among-their-pension-contributors/

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Academic.Tips. 2022. "How did Collateralized Debt Obligation (CDO) put institutional investors, like pension funds, at risk of losing large amounts of money among their pension contributors?" October 9, 2022. https://academic.tips/question/how-did-collateralized-debt-obligation-cdo-put-institutional-investors-like-pension-funds-at-risk-of-losing-large-amounts-of-money-among-their-pension-contributors/.

1. Academic.Tips. "How did Collateralized Debt Obligation (CDO) put institutional investors, like pension funds, at risk of losing large amounts of money among their pension contributors?" October 9, 2022. https://academic.tips/question/how-did-collateralized-debt-obligation-cdo-put-institutional-investors-like-pension-funds-at-risk-of-losing-large-amounts-of-money-among-their-pension-contributors/.


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Academic.Tips. "How did Collateralized Debt Obligation (CDO) put institutional investors, like pension funds, at risk of losing large amounts of money among their pension contributors?" October 9, 2022. https://academic.tips/question/how-did-collateralized-debt-obligation-cdo-put-institutional-investors-like-pension-funds-at-risk-of-losing-large-amounts-of-money-among-their-pension-contributors/.

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"How did Collateralized Debt Obligation (CDO) put institutional investors, like pension funds, at risk of losing large amounts of money among their pension contributors?" Academic.Tips, 9 Oct. 2022, academic.tips/question/how-did-collateralized-debt-obligation-cdo-put-institutional-investors-like-pension-funds-at-risk-of-losing-large-amounts-of-money-among-their-pension-contributors/.

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