How do market participants gauge the default risk of a bond issue?
What will be an ideal response?
Market participants gauge the default risk of an issue by looking at the default rating or credit rating assigned to a bond issue by one of the three rating companies—Standard & Poor's, Moody's, and Fitch.Default risk is a form of credit risk.Credit risk refers to the risk that a borrower will default on any type of debt by failing to make required payments.The risk is chiefly that of the lender and includes lost principal and interest, disruption inpayments, and increased collection expenses.
You might also like to view...
The goal of _____ is not to gain small incremental cost savings, but to achieve great efficiency leaps-of 100 percent and even 1000 percent.
Fill in the blank(s) with the appropriate word(s).
A poor illustration of a single-channel, single-phase queue would be ______.
a. a highway toll plaza b. a McDonald’s restaurant serving line c. the security gate line at the airport d. the full-service line at the grocery store
Which model reviews projects over a long horizon and measures the results of major activities taken to support the overall vision, mission, and goals of the organization? This model helps answer two questions: "Did we select the right projects?" and "Did the project contribute to the long-range strategic direction of the firm?"
A. Balance scorecard B. Retrospective and lessons learned C. Phase gate D. Maturity E. Project office
Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is
A. liable for payment of the $10,000. B. liable only if Ned still works for Mary. C. not liable, because the consideration is in the past. D. not liable, because the consideration was unintentional.