Asked by Ashton McGinn on Apr 25, 2024

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Provide an appropriate definition of default risk premium.

Default Risk Premium

The additional amount a borrower must pay to compensate the lender for assuming the risk that the borrower may default on the loan.

  • Comprehend the principles of bond risk encompassing interest rate risk, default risk, and inflation risk.
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Kassidy Thiphavong6 days ago
Final Answer :
The portion of a nominal interest rate or bond yield that represents compensation for the possibility of default.