Risk Occurs When the Issuer of the Bond Is Unable

question 5

True/False

Risk occurs when the issuer of the bond is unable or unwilling to make interest payments when promised or pay off the face value when the bond matures.

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Definitions:

Equilibrium Price

The equilibrium price is the market price at which the supply of an item equals its demand, leading to stable market conditions.

Market Imbalances

Situations where the quantity supplied of a good does not equal the quantity demanded, leading to surpluses or shortages.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price.

Market Equilibrium

The state in economics where the supply of goods matches demand, leading to stable prices.