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1) A company goes bankrupt with $60 million in assets (market value at time of dissolution). It also has $100 million in outstanding bonds in
1) A company goes bankrupt with $60 million in assets (market value at time of dissolution). It also has $100 million in outstanding bonds in 2 classes: $50 million in senior secured bonds, and $50 million in junior subordinated bonds. In theory, what will be the recovery rates of these bonds? What might cause the actual recovery rate on the junior bonds to be higher
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