Default Risk Arises from the Fact That

question 39

Multiple Choice

Default risk arises from the fact that

• A)borrowers differ in their ability to repay in full the principal and interest required by a loan agreement.
• B)the bond price drops when interest rates rise.
• C)it is inherently riskier to wait for a capital gain than to receive an immediate interest payment.
• D)interest rates are far more likely to go up than to go down.

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Definitions:

Absolute Pitch

The ability to identify or recreate a musical note without any reference pitch.

Early Childhood

A developmental period from birth to eight years of age, characterized by rapid physical, cognitive, and emotional growth.

Vestibular System

The sensory system that contributes to balance and spatial orientation, located in the inner ear.

Head Position

The orientation or angle of the head in relation to the body, which can influence perception, balance, and communication.