Question

    Recovery r isk is a part of the overall credit risk .

    Recovery risk is primarily dependent on __ ______
    A The tenure of the loan to understand the payback period of loan Correct Answer Incorrect Answer
    B The amount of collateral provided by the borrower to understand the extent of security Correct Answer Incorrect Answer
    C The market value of equity of the borrower to recover in case of bankruptcy Correct Answer Incorrect Answer
    D The interest rate charged on the loan that affects the recovery period and cost of default Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    Recovery Risk is related to the potential losses when the borrower defaults and the ability to recover the owed amount, which often depends on the quality of collateral or third-party guarantees  

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