Toxic Waste


DEFINITION of 'Toxic Waste'

A slang term referring to securities that are unattractive due to certain underlying provisions or risks making them generally illiquid with poor pricing schemes and transparency.


Mainly used in reference to CMOs, toxic waste represents the small portion of these products that are byproducts created as a result of providing the majority of CMOs with minimal risk. In effect, this small portion of byproducts is used as outlets for transferring a substantial portion of the underlying risks involved in making the obligations and then marketed to investors.

  1. Collateralized Mortgage Obligation ...

  2. Tranches

  3. Structured Finance

    A service that generally involves highly complex financial transactions ...
  4. Mortgage-Backed Security (MBS)

  5. Pass-Through Security

  6. Surrender Period

Related Articles
  1. Insurance

    CDOs And The Mortgage Market

    These structured products contribute to keeping borrowing rates low.
  2. Options & Futures

    20 Investments You Should Know

  3. Fundamental Analysis

    What are the components of shareholders' equity?

  4. Bonds & Fixed Income


  5. Bonds & Fixed Income


  6. Bonds & Fixed Income

    Why are bond yields calculated in terms of basis points?

  7. Investing Basics

    What is the Stock Market?

  8. Investing

    Commercial Paper

  9. Investing Basics


    Understanding share counts, including outstanding shares relative to float, is an integral part of determining whether or not to invest in a particular company.
  10. Investing Basics

    What is the difference between authorized shares and outstanding shares?

    Calculating financial ratios can help investors understand a company's financial position, but only when a knowledge of various terms is at the foundation.

You May Also Like

Hot Definitions
  1. Commercial Paper

  2. Federal Funds Rate

  3. Fixed Asset

  4. Break-Even Analysis

  5. Key Performance Indicators - KPI

  6. Bank Guarantee

Trading Center