Default Risk Arises from the Fact That

Multiple Choice

Default risk arises from the fact that

A) borrowers differ in their ability to repay in full the principal and interest required by a loan agreement.
B) the bond price drops when interest rates rise.
C) it is inherently riskier to wait for a capital gain than to receive an immediate interest payment.
D) interest rates are far more likely to go up than to go down.