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You are analyzing a bond with a CCC credit rating, which according to your statistics suggest that the probability of default is 22 percent. In
You are analyzing a bond with a CCC credit rating, which according to your statistics suggest that the probability of default is 22 percent. In the event of default, due to the state of the industry and the economy, and the fact that this is a senior unsecured issue, you anticipate a recovery rate of 47 pennies on the dollar invested. Under these conditions, what is your estimate of expected loss, as a percentage? |
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