A debt backed by a pool of assets, such as loans, leases, credit card debt, royalties, or receivables is known as a?

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Andsteve8428id Andsteve8428id

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A debt backed by a pool of assets, such as loans, leases, credit card debt, royalties, or receivables is known as a?

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Smecloudbird18id Smecloudbird18id · Answer 1

A debt backed by a pool of assets, such as loans, leases, credit card debt, royalties, or receivables is known as a collateralized debt obligation.

A collateralized debt obligation also known as CDO is an example of an asset-based security (ABS).

It is just like a loan or any bond which one is backed by a portfolio of debt instruments like the bank loans, mortgages, credit card receivables, aircraft leases, smaller bonds, and sometimes even other ABSs or CDOs also.

This portfolio generally acts as the collateral for the interest generated by the CDOs, which is reaped by the institutional investors who are purchasing it.

In general terms of investments, asset backing refers to a security whose value is deriven from a single asset or a pool of assets.

To know more about asset backing here:

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