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Collateralized debt obligations (CDOs) have experienced explosive growth over the last 20 years. Which of the following is NOT one of the reasons for this growth? A. The CDO structure allows a firm to remove toxic assets from its balance sheet, reducing risk and freeing up regulatory capital. B. Brokerage fees and management fees provide brokerages and asset managers a continuous source of income. C. The CDO structure allows for redistributing credit risk through credit tranching. D. Risky assets underlying a CDO exhibit high correlation with equity and bond markets. This allows investors to gain exposure to these markets without the cost of purchasing individual securities. |