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Assume that you expect to recover 40% of the principal amount of a senior unsecured bond issued by a company in the event of default.

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Assume that you expect to recover 40% of the principal amount of a senior unsecured bond issued by a company in the event of default. The default probability of the bond is 50%. If you hold $1,000 principal amount of the bond, what is your dollar loss severity? O $500 O $300 O $400 O $600

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