Event risk is the possibility that a bond will experience which one of the following?

Question

Quizplus · Accepted Answer

Event risk refers to the possibility of a sudden and adverse change in the financial or structural condition of the bond issuer, which could lead to a decrease in credit quality and ultimately impact the value of the bond negatively. A sudden change may include things like changes in leadership, mergers, or unexpected news that affects the company's financial position. The other options, such as unexpected increase in market value, sudden decline in convertible value, or unexpected call by issuer, may have an impact on bond value, but they are not necessarily event risks.

Event Risk Is the Possibility That a Bond Will Experience