Economics Risk And Return Questions
Credit risk refers to the potential loss that a lender or investor may face if a borrower or debtor fails to repay a loan or fulfill their financial obligations. It is the risk of default on a debt, where the borrower may be unable or unwilling to make timely payments or repay the principal amount. Credit risk is a significant consideration for financial institutions and investors, as it can impact their profitability and overall financial stability. Various factors, such as the borrower's creditworthiness, economic conditions, and industry trends, can influence the level of credit risk associated with a particular loan or investment.