Question

Other things being constant in which of the loan default case the recovery rates would be...

Other things being constant in which of the loan default case the recovery rates would be highest

Options:

1.Housing Loan secured on Residential property

2.Business loan based on security of Stock and Debtors

3. Gold Loan secured by gold

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Answer #1

The answer is 3. Gold loan secured by gold

House is not the most liquid asset which was on show at the time of financial crisis.

Stock and debtors can go bad due to the very inherent nature of business and then they are written off.

Gold is securely kept in the custody of the lender, he/she can easily sell the gold if the loan went bad.

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