A C.D.O. is a pool of securities — in this case, 90 subprime mortgage-backed securities.
This is particularly true in the case of specialized investment strategies, like the market for distressed debt, where there is a finite pool of securities to place bets on.
It is another to figure out the value of the mortgage pools within a CDO, which will own a diversified pool of securities.Nor is it clear what will be the upshot of Congress's attempts to protect struggling borrowers and to punish what it sees as predatory lenders.
When building a portfolio, you can assemble it one stock at a time or buy exchange-traded funds, pools of securities that trade on stock exchanges.
The companies have injected their own capital into pools of securities, arguing that new business policies are helping greater numbers of borrowers.
One area Mr. Kim leaped into with the encouragement of Mr. O'Neal was the market for collateralized debt obligations, complex pools of securities tied to assets like subprime mortgages.
Deerfield, based in Chicago, manages $7.2 billion in pools of securities known as collateralized debt obligations for pension funds and other institutions.
The day before Bear Stearns had sheepishly informed clients that two of its hedge funds, which had placed highly leveraged bets on pools of securities backed by subprime loans, known as collateralised debt obligations or CDOs, were all but worthless.
"The good news is that the losses will be widely distributed across the different owners of these pools of securities," said Stuart A. Gabriel, a finance professor at the Anderson School of Management at the University of California, Los Angeles.
Closed-end funds, which are also pools of securities that trade throughout the day, are actively managed and often sell for sharp discounts or occasionally at premiums to the value of their underlying assets.
