Arnold Williams (notebuyer) wrote,
Arnold Williams

What is that CDO worth?

What is that CDO worth? That question is at the heart of the market problems we're currently facing.

And, as it turns out, there is a way to find out what the "Collateralized Debt Obligation" that people invested in should be worth, after plugging in a few numbers.

The problem, though, is that any good market maker will take that, say, "It's a reasonable guess, but are you BUYING at that price, or SELLING at that price?" And there is where the rubber meets the road: these are now sold in a market which is unsure enough to treat estimates as ceilings.

After reading the Wikipedia article referenced above, the question will occur to some of you: why not invest in things that you understand, instead?
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