Fixed Income Q7

7Andrew Corp. issues a bond to Brad Corp. worth $100,000. Interest rate payments schedule and rate have been agreed upon. However, due to Andrew’s financial instability, it may fail to make timely interest payments. The risk of loss to Brad resulting from this is best known as:

Option : A
Explanation : Credit risk is the risk of loss resulting from the issuer failing to make full and timely payments of interest and/or repayments of principal.

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