Question: Which statements are true about an ABS CDO created from the mezzanine tranche of an ABS? Check all that apply: a. The senior tranche of

Which statements are true about an ABS CDO created from the mezzanine tranche of an ABS?

Check all that apply:

a. The senior tranche of the ABS CDO is less risky than the senior tranche of the ABS.

b. Investors in the ABS CDO equity tranche are promised higher returns than investors who buy into the ABS CDO mezzanine tranche.

c. ABS CDOs are created to create more AAA-rates tranches.

d. If the underlying assets lose 10% of their value, investors in the ABS CDO mezzanine tranche can lose at most 10% of their investment.

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