Uncertainty that the party on the other side of an agreement will abide by the terms of the agreement is referred to as
A) price risk.
B) credit risk.
C) interest rate risk.
D) exchange rate risk.

Question

Quizplus · Accepted Answer

Credit risk refers to the uncertainty of whether the other party in an agreement will be able to fulfill their obligation to pay, which is often assessed through credit ratings and financial statements. Price risk refers to the uncertainty of the future price of an asset, interest rate risk refers to the uncertainty of changes in interest rates, and exchange rate risk refers to the uncertainties of changes in exchange rates.

Uncertainty That the Party on the Other Side of an Agreement