The portion of a bond's yield that compensates investors for the possibility that the bond's interest or principal might not be paid is called the:

Question

Quizplus · Accepted Answer

The default risk premium compensates investors for the risk that the bond issuer may default on its interest or principal payments. It is a measure of credit risk associated with the issuer's ability to meet its financial obligations. The other choices do not specifically relate to the risk of default.

The Portion of a Bond's Yield That Compensates Investors for the Possibility