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    Question

    The risk that a bond issuer will fail to make the

    promised interest or principal payments is known as:
    A Interest Rate Risk Correct Answer Incorrect Answer
    B Reinvestment Risk Correct Answer Incorrect Answer
    C Default Risk Correct Answer Incorrect Answer
    D Inflation Risk Correct Answer Incorrect Answer

    Solution

    Default Risk (or Credit Risk) is the risk that the bond issuer will be unable to make timely payments of interest or repay the principal upon maturity.

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