Which of the following statements about a cash collateralized debt obligations (CDO) special-purpose vehicle (SPV) is true?
AIn a cash CDO, the SPV invests in the actual securities that are used to generate payment to the tranches.
BIn a synthetic CDO, the SPV invests in the actual securities that are used to generate payment to the tranches.
CIn a synthetic CDO, the SPV does not invest in the actual securities that are used to generate payment to the tranches. Instead they invest only in a risk-free bond.
DIn a cash CDO, the SPV does not invest in the actual securities that are used to generate payment to the tranches. Instead they invest in a default swap and a risk-free bond.
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