Suppose the issuer of a bond fails to pay some of the interest or principal that was promised to the bondholders.This failure is referred to as a
A)breach.
B)default.
C)risk.
D)term failure.

Question

Quizplus · Accepted Answer

A default occurs when the issuer of a bond fails to make the scheduled interest or principal payments to bondholders. This is a breach of the terms of the bond agreement and represents a failure to meet the obligation to repay the borrowed funds. The default represents a significant risk to the bondholder, who may experience a loss of principal or interest income as a result.

Suppose the Issuer of a Bond Fails to Pay Some