Apays out cash flows from a collection of assets in different tranches, with the highest-rated tranch paying out first, while lower ones paid out less if there are losses on the underlying assets. negotiable cd adjustable-rate mortgage collateralized debt obligation (cdo) discount bond

The correct option to the following question is CDO(Collateralized Debt Obligation).

Explanation:

CDO(collateralized debt obligations), is the financial tool that is used by the banks to repackage the individual loans into the product sold to the investors on secondary markets.

It developed as the instruments for corporate debts markets, after the year 2002, CDO became the vehicles for refinancing the mortgage backed the securities.

A CDO is the type of the structured asset backed security.