Default Risk Is the Risk That the Borrower Is Unable

question 33

True/False

Default risk is the risk that the borrower is unable or unwilling to fulfil the terms promised under the loan contract.

---

Definitions:

Statistically Significantly

A measure of confidence in statistical analysis indicating that the observed effect is unlikely to be due to chance.

Diversified Portfolio

An investment strategy that involves spreading investments across various asset classes to reduce risk and volatility.

Capital Market Line

A line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk-free rate and the level of risk (variance).

Forecasted Return

The expected return on an investment based on models of analysis or historical performance data.