SYNTHETIC CDO
Collateralized debt obligation investing in credit default swaps or other non-cash assets to accumulate exposure to a portfolio of fixed-income assets. Normally, these are divided into credit tranches according to the credit risk level assumed. Lower tranches make up the initial investments into these debt obligations while senior tranches need not to make an initial investment. These tranches receive regular payments based on the cash flows from these swaps. The synthetic CDO and its investors will take responsibility on the losses in case the event takes place in the fixed income portfolio.
POPULAR TERMS
Uptick
An Uptick is a transaction or a business deal for a financial instrument that surpasses the previous transaction in price. If the price of a stock ...
Lock In Profits
Realizing the profits of a position such as buying a stock by exiting at a gain. By doing so, the portion of that investment is no longer vulnerabl ...
Profit
Profit occurs when the amount of revenue gained from a business exceeds the expenses, costs, and tax needed to maintain the business activity.
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Due Diligence Meeting
Meticulous probe conducted by an underwriter, ensuring all details has been revealed to prospective investors before issuing a new security.
Laffer Curve
The relationship between tax rates and tax revenue collected by the government. Formed by Arthur Laffer, the curve states there is an optimal tax i ...
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