Which one of the following statements is NOT true?
A) The risk that the lender may not receive payments as promised is called default risk.
B) Investors must pay a premium to purchase a security that exposes them to default risk.
C) Australian government securities do not have any default risk and are the best proxy measure for the risk-free rate.
D) All of the above are true statements.

Question

Quizplus · Accepted Answer

Investors do not pay a premium to purchase a security with default risk; instead, they require a premium (higher return) to compensate for taking on the additional risk.

Which One of the Following Statements Is NOT True