With regard to the factors that determine recovery rates of traded bonds, which of the following statements is false?
A. The liquidity of the debtor's collateral has an impact of recovery rates of the firm's traded bonds.
B. The presence of more bank loans increases the recovery rates of the firm's traded bonds.
C. The seniority of debtor's debt has an impact of recovery rates of the firm's traded bonds.
D. The value of the debtor's collateral has an impact of recovery mtes of the firm's traded bonds.
Seniority defines the order of priority of the claimants with respect to the assets when the firm defaults.
The value and the liquidity of the collateral have an impact of recovery rates.
Bank debt would actually decrease the recovery rates ofthe traded bonds,
because bank debt tends to be senior and has the highest level of collateralization,
the more bank financing a finn uses, the lower the recovery rate on the traded bonds.