security for a borrower, as in “my parents let me use their
house as collateral for a loan”. The fine distinction between
collateral (which is provided by a third party )
and security
(which is provided by the borrower) still exists in the UK and
certain other jurisdictions. But in the United States, the terms are
virtually indistinguishable; collateral notes or
collateral surety
are pledges of assets to support a loan.
Collateralised debt obligation
An investment-grade security issued to investors in the
capital markets. Collateralised debt obligations (cdos) are
made up of a pool of existing bonds or loans (for example,
bonds issued by utilities in various emerging markets).
These are first transferred to a new company,
or special-
purpose vehicle, which then issues cdos to investors sup-
ported by the collateral of the original bonds or loans. By
transferring some of the risk to equity in the new company,
the issuer is able to raise part of the new cdos to investment
grade.
Typically, investors are offered various tranches of
debt and equity, some riskier than others. cdos are usually
divided into two sorts: collateralised bond obligations, which
are based
on bonds of different types; and collateralised loan
obligations, supported by loans. Issuers of cdos aim to profit
either from the difference in yield between the underlying se-
curities and the
new ones issued to investors, or simply, as with
banks, by spreading their risk to other investors.
Collect on delivery
US terminology for cash on delivery.
COMEX
A US commodities market founded in 1870. Formerly known as
the
Commodities Exchange, comex is now a division of the
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