Collateralized mortgage obligations (CMOs) are complex financial instruments created through the securitization of mortgage loans. They are structured to redistribute the cash flow risk associated with the underlying mortgages across multiple tranches. Investors in CMOs receive principal and interest payments as homeowners repay their mortgage loans. However, each tranche has distinct characteristics, including differing maturity dates, interest rates, and levels of risk. This structuring allows investors to choose tranches based on their risk appetite and investment goals.