The likelihood that a customer will fail to repay credit extended to it is referred to as ____.
A) default risk
B) maturity risk
C) bad-debt loss ratio
D) opportunity cost

Question

Quizplus · Accepted Answer

Default risk refers to the likelihood that a customer will fail to repay credit extended to it. Maturity risk refers to the possibility that an investment's value might change due to changes in interest rates over a given time frame. Bad-debt loss ratio is the percentage of debt that is unlikely to be collected from customers. Opportunity cost refers to the cost of foregoing the next best alternative when making a decision.

The Likelihood That a Customer Will Fail to Repay Credit