Which one of the following is the risk that a bond issuer will cease paying the interest and principal payments as scheduled?

Question

Quizplus · Accepted Answer

Default risk refers to the risk that a bond issuer will fail to make interest or principal payments as scheduled, also known as defaulting on the bond. Therefore, B is the correct answer. Interest rate risk refers to the risk that changes in interest rates will affect the value of the bond. Market risk refers to the risk of overall market fluctuations affecting the value of the bond. Conversion risk refers to the risk of a convertible bond not being converted into the desired amount of common stock. Earnings risk refers to the risk of a company's earnings decreasing, which could affect their ability to make bond payments.

Which One of the Following Is the Risk That a Bond