Collateralized Debt Obligations (CDOs) - A Complicated Way to Spread Risk

Like the junk bonds of the late 1980s, collateralized debt obligations, or CDOs, have become the financial headline of their age.

These investment vehicles took much of the blame for turning a downturn in the US housing industry into the general credit crisis of late 2007. But it's important to remember that the term CDO refers to a broad range of investment vehicles, some much easier to understand than others, and some much better at spreading manageable risks among a broad group of investors - the original intent of these securities - than others. Continue reading about CDOs...