A premium which reflects possibility of issuer who does not pay principal amount of bonds is called

A seasoned risk premium
B nominal risk premium
C default risk premium
D quoted risk premium

Correct Answer: default risk premium

A premium which reflects possibility of issuer who does not pay principal amount of bonds is called default risk premium. A default risk premium is effectively the difference between a debt instrument's interest rate and the risk-free rate.
Bissoy MCQ
#Commerce #Financial Management

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