A Default Premium Is the Interest Rate Premium

question 2

Multiple Choice

A default premium is the interest rate premium

• A) under normal market circumstances.
• B) when there are no market fluctuations.
• C) covering the default risk.
• D) for government debt.
• E) a borrower receives after defaulting.

---

Definitions:

Horizontal Axis

In a graph or chart, the x-axis, representing the independent variable or the basis of comparison across the chart.

Indifference Curves

A graphical representation showing different combinations of two goods among which a consumer is indifferent.

Avocados

A nutrient-rich fruit characterized by its green, creamy texture and used in various culinary dishes worldwide.

Grapefruits

A citrus fruit known for its slightly bitter and sour taste, commonly used in breakfast dishes and juices.