The loss in value caused by credit risk is borne first by the liability holders,and then by the equity holders.

Name: The loss in value caused by credit risk is borne first by the liability holders,and then by the equity holders.
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The loss in value caused by credit risk is borne first by the equity holders, and then by the liability holders. Equity holders' claims are subordinate to those of liability holders (such as bondholders), meaning they absorb losses first.

The Loss in Value Caused by Credit Risk Is Borne