1. The risk that the debtor (the entity that borrowed money) does not repay part or all of its financial obligation is called:
Default risk
Credit spread risk
Downgrade risk
Credit deterioration risk
2. A $100 million deal can be divided into two classes: a $90 million senior class and a $10 million subordinate class. If there is $11 million of losses, what percentage of loss will the senior class realize?
0%
1%
1.11%
2.22%