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If the recovery rate (RR) increases and the probability of default (PD) decreases, what will...

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Finance

If the recovery rate (RR) increases and the probability of default (PD) decreases, what will be the effect on expected loss (EL), all else equal?

RR Increase PD Decrease

  1. Increase Increase
  2. Decrease Increase
  3. Increase Decrease
  4. Decrease Decrease

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