Dictionary

Default Risk

  • Updated on

A non-payment of a financial obligation by a borrower at the time it becomes payable, give rise to default risk. Generally, in all forms of credit extensions, investors and lenders are exposed to default risk.

In context of bonds, the default risk can be stated as a risk that a bond issuer might not be able to make interest and principal payments timely. The measurement of default risk is done through ratings issued by the credit rating agencies.

Term of the day

Absolute Advantage

What is an Absolute Advantage? Absolute advantage is one of the key macroeconomic terms, which is based on the principles of Capitalism and is often utilised i......
[ Read More ]
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK