A Synthetic CDO (Collateralised Debt Obligation) is a financial product as an advanced form of CDO that invests in non-cash assets such as credit default swaps (CDS), options, and insurance contracts to obtain exposure to a portfolio of fixed-income assets rather than physical assets such as loans or bonds, while the underlying assets of regular CDOs are traditional fixed-income assets, such as loans, mortgages, and bonds. Synthetic CDO is typically divided into tranches, or sections, based on the level of credit risk an investor. (Refer to the Collateralised Debt Obligation (CDO))
Related Definitions in the Project: The Commercial Definitions
