Default Risk

question 16

Multiple Choice

Default risk:

• A) is the risk the bond issuer will be unable to pay the interest and principal on the obligation
• B) means a high percentage yield (11% or higher)
• C) with a 11.3% yield on a bond means that there is little risk involved in paying back the principal and interest
• D) means that the interest rate can be low because the risk is high

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Definitions:

Semantic

Relating to meaning in language or logic, especially the meanings of words and phrases in context.

Episodic

Pertaining to or comprising events that are distinct and separate; often used to describe types of memory that involve recalling specific events from the past.

Short-Term

Describes a limited period, often referring to memory or goals that span a brief time from seconds to weeks.

Long-Term Memory

The phase of the memory process capable of storing an unlimited amount of information over prolonged periods, ranging from days to decades.