Name and Describe the Two Labeling Forms

question 161

Essay

Name and describe the two labeling forms.

---

Definitions:

Default Risk

The risk associated with the possibility of a borrower failing to make required payments on their debt obligations.

Interest Rate Risk Premium

The compensation investors demand for bearing interest rate risk.

Term Structure

The relationship between interest rates or bond yields and different terms or maturities.

Duration

Duration is a measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, typically expressed in years.