Credit risk

From Nemo

Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Investor losses include lost principal and interest, decreased cash flow, and increased collection costs, which arise in a number of circumstances:

• A consumer does not make a payment due on a mortgage loan, credit card, line of credit, or other loan
• An Import business does not make a payment due on a mortgage, credit card, line of credit, or other loan
• A business or consumer does not pay a trade invoice when due
• A business does not pay an employee's earned wages when due
• A business or government bond issuer does not make a payment on a coupon or principal payment when due
• An insolvent insurance company does not pay a policy obligation
• An insolvent bank won't return funds to a depositor
• A government grants bankruptcy protection to an insolvent consumer or business

References:

1.http://en.wikipedia.org/wiki/Credit_risk

External Links:

• http://www.census.gov/hhes/www/income/income.html
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