What Is the Difference between Collateralized Debt Obligations (CDOs) and Mortgage-Backed Securities (MBS)?
MBS are investments marketed as securities, which entails bundling a set of mortgages. CDOs are investments marketed as securities, which includes a bundle of assets such as bonds, loans, and mortgages. CDOs therefore include mortgages and other instruments, and are packaged based on the corresponding risk level for investors.
Despite the definitive differences, CDO and MBS have overlaps in function: both are created and exchanged as financial instruments, and some MBS may be CDOs.
- What Is a Mortgage-Backed Security (MBS)?
- What Are the Advantages of Investing in MBS?
- Should I Invest in an MBS Fund Instead of Individual Mortgage-Backed Securities?
- How Are Mortgage-Backed Securities Different from Other Fixed Income Securities?
- What Are Residential Mortgage-Backed Securities (RMBS)?
- What Are Some Examples of Mortgage-Backed Securities?
- How Are Mortgage-Backed Securities Hedged?
- What Are Collateralized Debt Obligations (CDOs)?