Which of the following statements is true?
A)Marginal mortality rate is the historic default rate experience of a bond or loan.
B)The mortality rate is the probability of a bond or loan defaulting over a specified multi-year period.
C)Marginal mortality rate is the probability of a bond or loan defaulting in any given year of issue.
D)Marginal mortality rate is the probability of a bond or loan defaulting over a specified multi-year period.

Question

Quizplus · Accepted Answer

Marginal mortality rate refers to the probability of a bond or loan defaulting in any given year of issue. Option A is incorrect as it refers to historic default rates, which may not be relevant for future defaults. Option B is incorrect as it assumes a specific multi-year period, whereas marginal mortality rate is typically calculated on an annual basis. Option D is partially correct but includes the term "marginal" which is the key term in this question.

Which of the Following Statements Is True