Traditionally credit risk is defined as the risk that the borrower will fail to satisfy the terms of the obligation with respect to the timely payment of interest and repayment of the amount borrowed. This form of credit risk is called ________.

Question

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Default risk is the risk that a borrower will fail to repay the loan amount or interest payment when it is due. The other options - spread risk, market risk, and payment risk - do not specifically refer to the risk of default.

Traditionally Credit Risk Is Defined as the Risk That the Borrower