n NISM Certifications
XVII NISM Series XVII
Medium

Before investing in a corporate bond for retirement savings, it is crucial to assess the credit risk, which indicates the possibility of default by the issuer.

Practice question from NISM Series XVII- Retirement Adviser Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Inflation risk

  2. Credit risk

    Correct answer

  3. C

    Risk of low returns

  4. D

    Market risk

Why this is the answer

Credit risk pertains to the issuer's ability to repay the debt; evaluating this risk helps in selecting bonds issued by financially stable companies to minimize default probability.

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