The potential of a bond issuer not being able to repay the bond holder is called:
A) moral hazard.
B) default risk.
C) payment jeopardy.
D) repayment peril.

Question

Quizplus · Accepted Answer

Default risk refers to the risk that a bond issuer will be unable to make interest payments or repay the principal amount to the bond holder. This can occur due to a variety of factors, such as financial distress, bankruptcy, or economic downturns. Moral hazard refers to the risk that a party will act recklessly or irresponsibly because they are protected from the consequences of their actions. Payment jeopardy and repayment peril are not commonly used terms in finance or investing.

The Potential of a Bond Issuer Not Being Able to Repay