A possible reason for the high systematic risk of debt service ratio (DSR) is the:

Question

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The debt service ratio (DSR) is the ratio of an entity’s debt payments to its income. It is a measure of a borrower's ability to meet its debt obligations. The sensitivity of the DSR to rising nominal and real interest rates in the developed countries makes it a risky measure. As interest rates rise, borrowers have to pay more to service their debts, which can lead to defaults and bankruptcies. This makes the DSR more sensitive to interest rate movements and hence increases its systematic risk. It is not related to the other factors mentioned in the options.

A Possible Reason for the High Systematic Risk of Debt