When a borrower fails to pay back a loan according to the agreed-upon terms, it is called:
A) credit risk.
B) default.
C) adverse selection.
D) asymmetric information.

Question

Quizplus · Accepted Answer

Default refers to the failure of a borrower to repay a loan as per the agreed-upon terms. Credit risk refers to the likelihood of default. Adverse selection and asymmetric information relate to the problem of information asymmetry between the borrower and the lender, which can increase the likelihood of default but are not synonyms of default itself.

When a Borrower Fails to Pay Back a Loan According