The Risk That the Borrower Will Not Pay the Face

question 164

Multiple Choice

The risk that the borrower will not pay the face value of a bond on the maturity date is called the ________ risk.

• A) default
• B) maturity
• C) timing
• D) full-pay
• E) par value

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Definitions:

Liable

Being legally responsible for something, typically a debt or a legal obligation.

Constructive Notice

Notice of agency termination that is usually given by publishing an announcement in a newspaper.

Agency Relationship

An agency relationship exists when one party, the agent, is authorized to act on behalf of another, the principal, in business transactions with third parties.

Terminated

Terminated means bringing something to an end or conclusion, often referring to the cessation of employment or the conclusion of agreements.