Fixed Income Q136

0. Analyst 1: Bonds with the same credit rating have a comparable probability of default and comparable severity of loss given default.
Analyst 2: Bonds with the same credit rating have a comparable probability of default but the severity of the loss is not necessarily comparable.
Which analyst’s statement is most likely correct?

Answer
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Option : B
Explanation : Credit ratings primarily reflect the probability of default, but not necessarily the severity of loss given default.

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