Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 0 of 15
Which equation is correct?
B. Loss given default = Recovery rate - 1.
C. Recovery rate = Loss given default - 1.
A. Loss given default + Recovery rate = 1.
B. Loss given default = Recovery rate - 1.
C. Recovery rate = Loss given default - 1.
User Contributed Comments 2
| User | Comment |
|---|---|
| ashish100 | Tricky tricky.... |
| doubleling | According to investopedia: The recovery rate enables an estimate to be made of the loss that would arise in the event of default, which is calculated as (1 - Recovery Rate). Thus, if the recovery rate is 60%, the loss given default or LGD is 40%. |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
describe uses of private business valuation and explain applications of greatest concern to financial analysts;
CFA® 2025 Level II Curriculum, Volume 4, Module 25.