Question
Corporate debt issuers sometimes default, over time weve gathered the average recovery rates by debt types (seniority) and issuer credit ratings, which of the following
Corporate debt issuers sometimes default, over time weve gathered the average recovery rates by debt types (seniority) and issuer credit ratings, which of the following notes about recovery rates is true
A. | Zero coupon bonds cannot default, therefore, have a 100% recovery rate | |
B. | Actual recovery rates (amounts recovered) largely depend on the probability of default. Ie. If an issuer is highly likely to default, its also highly likely the recovery rate will be high | |
C. | In the event of default, equity (common stock) shareholders are the first to recover some of their principal | |
D. | Recovery rates can vary widely by industry and timing in a credit cycle |
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