obligation

play

noun ob·li·ga·tion \ ˌä-blə-ˈgā-shən \

Definition of obligation

1 :the action of obligating oneself to a course of action (as by a promise or vow)

2 a :something (such as a formal contract, a promise, or the demands of conscience or custom) that obligates one to a course of action

made an obligation to pay their children's college expenses

b :a debt security (such as a mortgage or corporate bond)

c :a commitment (as by a government) to pay a particular sum of money; also :an amount owed under such an obligation

Unable to meet its obligations, the company went into bankruptcy.

3 a :a condition or feeling of being obligated

felt an obligation to vote

b :a debt of gratitude

returned the favor as an obligation

4 :something one is bound to do :duty, responsibility

countries in which military service is an obligation

fulfilled their familial obligations

See obligation defined for English-language learners

See obligation defined for kids

Examples of obligation in a Sentence

She believes that all people have a moral obligation to defend human rights.
He argues that people in a community have certain obligations to each other.
She failed to fulfill her obligations as a parent.

Recent Examples of obligation from the Web

And what obligation do Christian women have in a moment such as this?

— emma green, The Atlantic, "What Obligation Do White Christian Women Have to Speak Out About Politics?," 20 Aug. 2017
The department has an obligation to make the retirement process as easy as possible, Trabert said.

— erika butler, The Aegis, "Aberdeen officer shot in the face in 2015 retiring," 11 Aug. 2017
Long distance relationships when both partners have intense work obligations are always difficult, but who knows what the future holds.

— kenzie bryant, vanityfair.com, "Elon Musk Revolutionizes Celebrity Breakup P.R.," 8 Aug. 2017
Long distance relationships when both partners have intense work obligations are always difficult, but who knows what the future holds.

— lisa ryan, The Cut, "Elon Musk Confirms Amber Heard Split by Commenting on Her Little Mermaid Instagram Picture," 8 Aug. 2017
O'Leary had attended Hanania's prior court appearances but could not make Friday's hearing due to another obligation.

— zak koeske, Daily Southtown, "Oak Lawn man pleads guilty in parking garage poodle tossing case," 28 July 2017
The trust fund money and its returns cannot be used for operations outside of repaying the city’s CalPERS obligations.

— jeff landa, Glendale News-Press, "Glendale establishes trust fund to mitigate escalating pension costs," 25 July 2017
Your lender has no obligation to remove you or your former spouse from your loan, regardless of your divorce agreement.

— marcie geffner, The Seattle Times, "6 reasons to refinance your mortgage when interest rates are rising," 22 July 2017
Heyn noted that Conservative and Orthodox congregations have an easier time maintaining a daily minyan due to an internalized sense of obligation that may be less motivating for Reform Jews.

— marvin glassman, Jewish Journal, "Miami temple offers virtual minyan service," 19 July 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'obligation.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of obligation

14th century

obligation Synonyms

Synonyms

burden, charge, commitment, devoir, do [archaic], duty, imperative, incumbency, need, office, responsibility

Related Words

oath, pledge, promise, troth, vow, word; arrangement, prearrangement, setup; compact, contract, covenant, pact, trust; debt, payment, tribute; compulsion, constraint, restraint; must, requirement; coercion, duress, force; appointment, engagement, reservation; burden, onus

Near Antonyms

grace, postponement, stay; discharge, ease, exemption, release, relief, waiver; loophole; alternative, choice, option, pick, preference, selection

Financial Definition of OBLIGATION

obligation

noun

What It Is

A collateralized debt obligation (CDO) is a security that repackages individual fixed-income assets into a product that can be chopped into pieces and then sold on the secondary market. They are called collateralized because the assets being packaged -- mortgages, corporate debt, auto loans or credit card debt- - serve as collateral for investors.

How It Works

CDOs are described as structured asset-backed securities because they pay cash flows to investors in a prescribed sequence, based on how much cash flow is collected from the package of assets owned.

The CDO is split into different risk classes known as tranches. Interest and principal payments are made in order of seniority so that senior tranches have the least risk. Junior tranches, which have higher default risk, usually have higher coupon payments.

A typical CDO may consist of a portfolio of 100 corporate bonds and have an average S&P rating of B+. Assuming a total portfolio size of $300 million, the CDO might have six classes or tranches:

collateralized debt obligation

The Class A senior tranche will offer investors the lowest yield since it has the highest S&P rating. The equity tranche would have the highest yield since it is the most risky component of the deal structure.

Why It Matters

Collateralized debt obligations allow banks and corporations to sell off debt and free up capital to re-invest or loan. The downside of CDOs is that the loan originators have little incentive to collect when loans in the package come due since these loans are now owned by other investors. This may make originators less disciplined in adhering to strict lending standards.

Another downside of CDOs is the complexity of these products. Buyers may not know exactly what they are buying or whether the package is really worth the price. The opaqueness and complexity of CDOs can result in a market panic if investors lose confidence and CDOs become more difficult to re-sell. This was the scenario during the Sub-Prime Crisis of 2007 when many banks were forced to take sizable write-downs on their CDO holdings.

Source: Investing Answers

OBLIGATION Defined for English Language Learners

obligation

play

noun

Definition of obligation for English Language Learners

: something that you must do because of a law, rule, promise, etc.
: something that you must do because it is morally right

OBLIGATION Defined for Kids

obligation

play

noun ob·li·ga·tion \ ˌä-blə-ˈgā-shən \

Definition of obligation for Students

1 :something a person must do because of the demands of a promise or contract

Make sure you know your rights and obligations before you sign.

2 :something a person feels he or she must do :duty

I can't go because of other obligations.

3 :a feeling of being indebted for an act of kindness Don't feel any obligation to return the favor.

Law Dictionary

obligation

play

noun ob·li·ga·tion \ ˌä-blə-ˈgā-shən \

legal Definition of obligation

1 :a promise, acknowledgment, or agreement (as a contract) that binds one to a specific performance (as payment); also :the binding power of such an agreement or indication

held that the amendment did not unconstitutionally impair the obligations of contracts
—Davis v. American Family Mut. Ins. Co., 521 N.W.2d 366 (1994)

2 :a debt security (as a corporate or government bond)

— collateralized debt obligation

:a security backed by a pool of diversified securities that usually do not include mortgages

— collateralized loan obligation

:a security backed by a pool of commercial loans

— collateralized mortgage obligation

:a bond collateralized by a pool of mortgage obligations or pass-through securities and paid according to the maturity and amortization schedule of its class and not directly from the underlying obligations — called also CMO

3 :what one is obligated to do, satisfy, or fulfill: as

a :a commitment to pay a particular amount of money

does not create a debt, liability, or other obligation, legal or moral
—State v. Florida Dev. Fin. Corp., 650 So. 2d 14 (1995)

; also :an amount owed in such a commitment

b :a duty arising from law, contract, or morality

had a legal obligation as an employer

a contractual obligation

4 in the civil law of Louisiana :a relationship that binds one party to a performance (as a payment or transfer) or nonperformance for another party — see also contract, offense, quasi-offense

Note: An obligation under civil law may arise by operation of law, naturally, or by contract or other declaration of will. The elements of an obligation are: the parties, an object, the relationship by virtue of which one party is bound to perform for the other's benefit, and, in the case of conventional obligations, a cause.

— conditional obligation

:an obligation that is dependent on an uncertain event

— conventional obligation

:an obligation taking the form of a contract

— heritable obligation

:an obligation that may be enforced by the successor of the obligee or against the successor of the obligor

— joint obligation

1 :an obligation binding different obligors to a performance for one obligee

2 :an obligation binding one obligor to a performance for different obligees

Note: In civil law, one of two or more obligors in a joint obligation is only liable for his or her portion of the performance.

— natural obligation

:an obligation arising from moral duty that is implied but not enforceable by the law