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Basic Question 7 of 11
The maximum amount that an investor/lender would pay to a third-party (an insurer) to remove the credit risk of a bond is:
B. The PV of the loss given default.
C. The loss given default.
A. The PV of the expected loss.
B. The PV of the loss given default.
C. The loss given default.
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Learning Outcome Statements
explain structural and reduced-form models of corporate credit risk, including assumptions, strengths, and weaknesses;
CFA® 2025 Level II Curriculum, Volume 4, Module 29.