Default premium

Default Premium
Default Premium definition :
A differential in promised yield that compensates the investor for the risk inherent in purchasing a corporate bond that entails some risk of default.

Default Premium
The additional amount a borrower must pay to compensate the lender for assuming default risk.

DEFAULT PREMIUM - A differential in promised yield that compensates the investor for the risk inherent ...
DEFAULT RATE - An alternative higher rate of interest or a premium specified in a loan document to be a...

Default premium
A differential in promised yield that attempts to compensate the investor for the risk inherent in purchasing a corporate bond that entails some risk of default.
Default risk ...

Default Premium
The difference between the promised yield on a bond and that which is actually expected in light of the possibility that the issuer of the bond might default on its obligation.

Some borrowers with higher-than-average default risk must pay a compensatory default premium. Default premium would constitute a higher bond yield offered by a company with scanty financial tenets.

surprises in inflation;
surprises in GNP as indicated by an industrial production index;
surprises in investor confidence due to changes in default premium in corporate bonds;
surprise shifts in the yield curve.

Failure to make timely payment of interest or principal on a debt security or to otherwise comply with the provisions of a bond indenture.
Default premium ...

One way to put the risk of a particular investment into context-called the risk premium in the case of stock or the default premium in the case of bonds-is to evaluate its return in relation to the return on a risk-free investment.

See also: Bills, Expense, Compensation, Spot price, Time Value