Theconcept underpinning a CDO is:

I. to spread risk among a series of securities, so that no single security carries ALL risk.

II. to burden some tranches with more risk than others; each tranche carrying different ratings and yields.

III. to enable the sale of loans that otherwise could not be securitized.

IV. to broaden lending capability of the financial institution.

None are foundational concepts for CDOs.

Only I and II are.

Only IV is.

All of them are, except IV.

All of them are.