Risk Terms
Default Risk
Definition
What is Default Risk?
The risk that an issuer does not pay interest or principalThe original amount of money invested or lent, excluding later returns. when due.
Example in practice
How This Looks in Practice
A commercial-paper issuer misses its maturityThe date when a debt investment's principal is scheduled to be repaid. payment, causing a direct loss or delayed recovery.
Keep learning
Related Terms
Risk Terms
Market Risk
The possibility of loss because broad market prices or rates move against an investment.
Risk TermsCredit Risk
The possibility that a borrower or issuer will fail to make promised payments or suffer a downgrade.
Risk TermsInterest-Rate Risk
The possibility that changing market interest rates will reduce an investment's value or income appeal.
MiscellaneousBusiness Day
A day on which relevant financial institutions and markets are open for normal processing.