Three purposes differentiate CDOs on the basis of how they acquire their assets and focus on the
motivations of asset sellers, asset managers, and trust preferred securities issuers. From the point of view of
CDO investors, however, all CDOs have a number of common purposes, which explain why many
investors find CDO debt and equity attractive. One purpose is the division and distribution of the risk of the
CDO’s assets to parties that have different risk appetites. Thus, a AAA investor can invest in speculative grade assets on a lossprotected basis. Or a BB investor can invest in AAA assets on a levered basis.