The risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss is referred to as:
A) interest rate risk;
B) liquidity risk;
C) market risk;
D) credit risk.

Question

Quizplus · Accepted Answer

Credit risk specifically refers to the risk of default or non-performance by one party in a financial transaction, leading to financial loss for the other party. Interest rate risk, liquidity risk, and market risk can also impact financial transactions but in different ways.

The Risk That One Party to a Financial Instrument Will