Default Risk
Default risk is the risk that a borrower or issuer fails to make required payments or otherwise meet the financial obligations of a debt agreement. A default can involve missed interest payments, failure to repay principal or other breaches defined by the agreement.
Why it matters to you
Higher yields on debt investments may partly compensate investors for taking greater risk. If a borrower defaults, investors can lose income, principal or both, regardless of whether the debt is represented by paper records or blockchain tokens.
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