Sản phẩm & Rủi roCâu 47 / 398
Credit (default) risk refers to the possibility that:
a.Interest rates in the market will rise
b.The investor will have to reinvest coupons at a lower rate
c.The issuer will fail to make timely interest or principal payments
d.Inflation will erode the purchasing power of the payments
Giải thích
Credit or default risk is the chance that the bond issuer cannot make its promised interest or principal payments on time. Rising rates describe interest-rate risk, lower reinvestment rates describe reinvestment risk, and eroding purchasing power describes inflation risk.
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Câu hỏi liên quan cùng chủ đề
- Which of the following bond ratings represents the LOWEST credit risk?
- The line between 'investment grade' and 'non-investment grade' (high-yield) bonds generally falls at:
- If a rating agency downgrades a company's bonds, the most likely immediate effect on those existing bonds is that their:
- An investor holds long-term bonds and worries that rising market interest rates will reduce their price. This concern describes:
- When interest rates fall, an investor who owns a callable bond faces the risk that the bond will be called and the proceeds must be reinvested at lower rates. This combined concern is BEST described as:
- An investor holding fixed-rate bonds during a period of rising inflation is MOST concerned about:
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