n NISM Certifications
VII NISM Series VII
Medium

The risk of default on a debt arising from a borrower failing to make payments is known as:

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

Options

  1. A

    Operational Risk

  2. Credit Risk

    Correct answer

  3. C

    Market Risk

  4. D

    Regulatory Risk

Why this is the answer

Credit risk arises when a borrower fails to meet debt obligations. For brokers, it may occur due to client debit balances, funding defaults, or non-confirmation of DVP trades.

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