Default Risk
Default risk is the risk born by a creditor that a debtor will default. Default risk is also called credit risk or financial risk.
Default Risk
Default Risk definition :
The risk that an issuer of a bond may be unable to make timely principal and interest payments. Also referred to as credit risk (as gauged by commercial rating companies).
What's A Spread?
Default risk
Also referred to as credit risk (as gauged by commercial rating companies), the risk that an
issuer of a bond may be unable to make timely principal and interest payments.
Related Terms: ...
DEFAULT RISK - The risk that an issuer of a bond may be unable to make timely principal and interest pa...
DEFAULT, - in finance, default is what occurs when a party is unwilling or unable to pay their debt obl...
Default risk:
The risk that a company will be unable to pay the contractual interest or principal on its debt obligations.
Defined benefit: ...
default risk
The risk arising from the chance that debtors will not make promised payments either on time or in full. Also called credit risk.
defeasance ...
Default Risk Uncertainty of a firm's ability to meet its debt obligations on time and in full.
Default Risk Premium (DRP) The additional return lenders require to compensate them for default risk.
Default Risk
The risk that a debt security issuer will be unable to pay interest on the prescribed date or the principal at maturity. Default risk applies to debt securities not equities since equity dividend payments are not contractual.
Default risk on bonds
Issuers that potentially run into cash flow problems, simultaneously attaches default risk to their bonds if there is uncertainty whether they can afford to pay coupons and principals.
DEFAULT RISK: The probability that a borrowing agent will not pay in full the agreed interest and/or principal. A default risk can be assigned to any bond or loan agreement.
DEFAULT RISK
A form of investment risk that a bond or other investment may not pay (default) the principal and/or interest when it becomes due.
DEFERRED ANNUITY ...
Default Risk
The event in which companies or individuals will be unable to make the required payments on their debt obligations. Lenders and investors are exposed to default risk in virtually all forms of credit extensions.
the default risk associated with those assets to investors; and it increases a borrower's funding options.
Ø Default Risk: FMPs are not totally risk-free options as they appear to be. This is because they invest in commercial papers issued by companies, which is an unsecured debt.
Default risk is the main determiner of the interest rate a bank will charge a borrower.
Default risk Risk that a particular debtor will fail to make timely payments of interest and principal. Interest rates on a debt instrument rise as the default risk increases.
default risk Default risk refers to the danger either side of an agreement will not live... defeasance A provision in an instrument that nullifies it when certain events occur.
Related: Default risk. Credit balance The surplus in a cash account with a broker after purchases have been paid for, plus the extra cash from the sale of securities.
Related: default risk Credit enhancement Purchase of the financial guarantee of a large insurance company to raise funds. Credit period The length of time for which the customer is granted credit.
default risk The risk that a company or individual will be unable to pay the contractual interest or principal on its debt obligations.
Government securities are attractive to investors because are free of default risk, benefit from state and local taxes exemption, and are among the most liquid of financial instruments.
Also known as default risk....(Read more)
Country-specific Risk
The risk inherent in holding shares, bonds or other securities whose fortunes are closely allied with a particular country. If the country g...(Read more)
Coupon ...
financial guarantee protecting a municipal bond issue against default risk. Coverage is purchased from a number of private insurance companies, such as AMBAC Indemnity Corporation, and the Municipal Bond Insurance Association.
The holder of any debt is subject to interest rate risk and credit risk, inflationary risk, currency risk, duration risk, convexity risk, repayment of principal risk, streaming income risk, liquidity risk, default risk, maturity risk, ...
Credit risk, also called default risk, is the possibility that a bond issuer won't pay interest as scheduled or repay the principal at maturity.
When a bond is rated investment grade, its issuer is considered able to meet its obligations, exposing bondholders to minimal default risk.
As ratings are a measure of default risk they should be roughly in line with the risk premium on the securities concerned.
thestreetratings.com there is not default risk from the counterparty since participants must post a performance bond. Default risk from the exchange itself remains, however. (See also 'Forward Contract.') ...
These funds craft strategies to manage their exposure to interest rate risk, default risk, and illiquidity in the convertible bond market, and pricing volatility in both the stock and bond markets.
(This difference in promised interest rates between low- and high-risk bonds of the same maturity is called a credit spread.) Bond-rating agencies (Moody's and Standard and Poor's, for example) provide an indication of the relative default risk of ...
In practice, short-term government securities (such as US treasury bills) are used as a risk-free asset, because they pay a fixed rate of interest and have exceptionally low default risk.
Credit Ratings Agencies: Ranking Bonds for Safety; Default Risk and AAA Rat...
Insurance Company Ratings - How Safe is Your College Account?
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Rating Agencies - What are Rating Agencies ...
Agencies that evaluate the credit of a bond issuers and rates them accordingly. Ratings refer to the level of default risk associated with the bond. Higher ratings mean there is less chance that the issuer will default on the bond payments.
These characteristics are believed to affect the default risk or cost of the loan.
Business sellers analyze the buyer's ability to repay the note very carefully. Your assessment of the business buyer's default risk should determine what interest to charge on the note or whether it should be offered at all.
Junk Bond - A bond rated 'BB' or lower because of its high default risk.
Also known as a "high-yield bond" or "speculative bond".
Credit Ratings
Methodologies, Rationale and Default Risk
Michael Ong
quality ...
The only securities that consistently escape a haircut are US government bonds because they are considered free of default risk.
Hard assets ...
Evaluating information on companies and bond issues in order to estimate the ability of the issuer to live up to its future contractual obligations. Related: Default risk.
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Personal Finance Glossary ...
Ladder Approach: A method involving purchase of several investments, each with a different maturity date, to reduce inflation, interest rate risk and default risk for fixed income investment.
Yield Curve
Graph depicting the relationship between yields and current maturity for securities with identical default risk.
Yield-to-Call
Return available to call date taking into consideration the current value of the call premium, if any.
The risk that an issuer of debt securities or a borrower may default on his obligations, or that the payment may not be made on a negotiable instrument. Related: Default risk.
Credit score ...
CREDIT RISK The possibility that a bond issuer will default, failing to repay principal or interest as promised. "Credit risk" is also known as "default risk." ...
is the amount of risk the holder of an asset or security is faced with as a consequence of holding the security or asset. For traders exposure is the potential to make a profit or loss from fluctuations in market prices. To minimise default risk ...
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 risk ...
By buying a CDS, a market participant hedges certain risks arising from credit relationships in exchange for a premium, which is referred to as a CDS Level. The higher the level, the higher the default risk estimated by the market for the issuer.
Secured Note: A standard contractual obligation to lend and borrow money at a specified rate of interest. Secured notes can be modified with additional restrictions that increase their value and decrease the default risk.
Credit analysis
Evaluating information on companies and bond issues in order to estimate the ability of the issuer to live up to its future contractual obligations. Related: Default risk.
This security bears no DEFAULT RISK and has a high degree of LIQUIDITY and low INTEREST RATE RISK in view of its short term. The instrument is negotiable and is issued at a discount from the FACE VALUE.
to have the lowest long term return but your return is known at the time you invest and therefore cash is considered to be essentially risk free (In this case assume that the cash is invested in government securities which have no default risk).
In addition, the Fair Isaac Corporation employs different methods to rate one's suitability for three types of loan - consumer credit, automobile loans, and mortgages. The three credit instruments come with different default risks which are taken ...
 See also: Credit risk, Expense, Funding, Banks, Investment risk
  
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