Question
For most high-quality bond issuers, investors tend to focus mainly on assessing default probability rather than potential loss severity from default. True or False? Group
For most high-quality bond issuers, investors tend to focus mainly on assessing default probability rather than potential loss severity from default. True or False? Group of answer choices
A. False, because investors should care more about recovery rate than the probability of default.
B. True, because this practice is widely used among large rating agencies.
C. False, because only assessing the probability of default would give a partial picture of the expected loss from the investment.
D. True, because default risk is quite low for this group of issuers.
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