Credit risk is:
A) the risk of a borrower defaulting on a loan.
B) lower, the longer the length of the loan.
C) lower, the larger the amount of the loan.
D) the risk of not being able to get a loan when your credit is good.

Question

Quizplus · Accepted Answer

Credit risk refers to the risk that a borrower may default on a loan. This means they may be unable to repay the loan on time or in full, which can result in financial losses for the lender. Therefore, option A is the correct answer. Option B and C are incorrect because the length or size of the loan does not necessarily reduce credit risk. Option D is also incorrect as it confuses credit risk with the risk of loan rejection, which are two different concepts.

Credit Risk Is