A cbo collateralized bond obligation consists of several

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A CBO (Collateralized Bond Obligation) consists of several tranches of notes from a repackaging of corporate bonds, ranging from equity to super senior.

Which of the following is generally true of these structures?

A. The total yield of all the CBO tranches is slightly less than the underlying repackaged bonds to allow the issuer to recover their fees/costs/profits.

B. The super senior tranche has expected loss rate higher than the junior tranche.

C. The super senior tranche is typically rated below AAA and sold to bond investors.

D. The equity tranche does not absorb the first losses of the structure.

Reference no: EM13569049

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