The Risk That All Loans Will Default at the Same

question 196

Multiple Choice

The risk that all loans will default at the same time is called:

• A)systemic risk.
• B)diversified risk.
• C)liquid risk.
• D)security risk.

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Definitions:

Note Payable

A written promise to pay a specific sum of money, on demand or at a set time, to the holder of the note.

Maturity Value

The amount that will be paid to the holder of a financial instrument at its maturity date, including principal and any remaining interest.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its interest payments on outstanding debt.

Operating Expenses

The ongoing costs for running a business, excluding the cost of goods sold, such as rent, utilities, and salaries.