CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

For a 10-year corporate bond the probability of default is estimated to be 2%. The expected recovery rate in the event of default is 70%. What is the expected loss?

A. 1.4%
B. 0.6%
C. 0.686
Correct Answer: B

2% x (1 - 70%) = 0.6%

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