Norman Bank made a loan of $1,000,000 to Jarod LeFevre.Jarod has declared bankruptcy and Norman Bank has just learned that the judge in the case has ruled that Jarod does not have to pay any part of the loan back or forfeit any of his assets.Which type of risk would this be an example of?

Question

Quizplus · Accepted Answer

This is an example of legal risk, as the bank made a loan with the expectation of being repaid, but the court ruling has eliminated the obligation for the borrower to reimburse the loan.

Norman Bank Made a Loan of $1,000,000 to Jarod LeFevre