Default risk意思

"Default risk" is a term used in finance and economics to describe the risk that an issuer of a financial security, such as a bond, will be unable to make timely payments of interest and/or principal when due. In other words, it is the risk of default on the debt obligation.

When investors buy bonds or other types of debt securities, they are lending money to the issuer in exchange for the promise of interest payments and the return of principal at a future date. The default risk is the risk that the issuer will not fulfill this promise because it is unable to meet its financial obligations.

Default risk is an important consideration for investors when evaluating the creditworthiness of an issuer and the potential return on their investment. Securities with higher default risk are generally offered at higher interest rates to compensate investors for the greater risk they are taking on.