No. of Recommendations: 3
<But, in theory, it should be possible to find out what the risk, maturity, and interest are >

Even the investment banks that package and sell the derivative tranches don't know what the risks are. That is at the root of the credit crunch.

Ratings agencies colluded with the packagers to assign ratings to the tranches. Each rating is supposed to have a fairly well-defined level of expected defaults. When the defaults turned out to be higher, they discovered that they really didn't know what to expect.

I wouldn't sell such a security into a panicked, frozen market. Like other bonds, unless it defaults, it may continue to pay the expected level of interest.

However, I would instruct my broker to not buy any more of these....unless I wanted to take on a high level of risk to take the chance of a high return. Not my game.

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