Which of the Following Statements Is False

question 25

Multiple Choice

Which of the following statements is false?

• A)Default risk is the risk that the borrower is willing but unable to fulfil the terms promised under loan contract.
• B)Default risk is the risk that the borrower refinances the loan before maturity.
• C)Default risk is the risk that the borrower is able but unwilling to fulfil the terms promised under loan contract.
• D)Default risk is the risk that the borrower is unable and unwilling to fulfil the terms promised under loan contract.

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Definitions:

Expected Returns

The average return an investor anticipates receiving from an investment, taking into account the probability of different outcomes.

Probability

A measure of the likelihood that an event will occur, often expressed as a number between 0 and 1, where 0 means impossibility and 1 indicates certainty.

Expected Income

The forecasted amount of money that an individual or entity anticipates receiving over a certain period.

Expected Expense

Anticipated costs associated with planned activities or purchases within a certain period.