Business / Taxes / Collateral: Assets with monetary value, such as stock, bonds, or real estate, which are used to guarantee a loan, are considered collateral. If the borrower defaults and fails to fulfill the terms of the loan agreement, the collateral, or some portion of it, may become the property of the lender. For example, if you borrow money to buy a car, the car is the collateral. If you default, the lender can repossess the car and sell it to recover the amount you borrowed. Loans guaranteed by collateral are also known as secured loans.
Business / Finance / Collateralized Bond Obligation (CBO): A bond in which the issuer (often a holding company) grants investors a lien on stocks, notes, bonds, or other financial asset as security. Compare mortgage bond. MORE
Business / Finance / Collateralized Mortgage Obligation (CMO): Investment-grade bonds backed by a collection of junk bonds with different levels of risk, called tiers, that are determined by the quality of junk bond involved. CBOs backed by highly risky junk bond MORE