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The recovery rate on credit instruments is defined as one

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The recovery rate on credit instruments is defined as one minus the loss rate. The loss rate can be significantly influenced by the volatility of the value of a firm's assets before default. All other things being equal, in the event of a default, which type of company would we expect to have the highest recovery rate?

A. A trading company active in volatile markets

B. An Internet merchant of trendy consumer products

C. An asset-intensive manufacturing company

D. A highly leveraged hedge fund

Reference no: EM13568913

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