__________ is the probability of a debtor not paying the principal and/or interest due on an outstanding debt
A)Risk premium
B)Liquidity premium
C)Credit risk
D)Liquidity risk

Question

Quizplus · Accepted Answer

Credit risk refers to the probability of a debtor not being able to pay back the principal and/or interest on an outstanding debt. It is the risk of default or non-payment by the borrower. Lenders typically factor in credit risk when deciding whether to grant a loan or credit, and at what interest rate.

__________ Is the Probability of a Debtor Not Paying the Principal