Default Risk

question 88

Multiple Choice

Default risk

• A) is the probability that a borrower will not pay in full the promised coupon or principal.
• B) exists only for the bonds of small corporations.
• C) is also known as market risk.
• D) is zero for bonds issued by cities and states.

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Definitions:

Physiological Needs

Basic human requirements for survival and physical well-being, such as food, water, shelter, and sleep, as identified in Maslow's hierarchy of needs.

Security Needs

Fundamental requirements concerning an individual's or entity's need for safety and protection from harm.

Deficiency Needs

According to Maslow's hierarchy of needs, these are basic needs (such as food, shelter, and safety) that must be met before an individual can focus on higher-level psychological needs.

Security Needs

Basic human requirements for safety and protection from physical or emotional harm.