Inverse Relationship Between Default Probability and Expected Return
For a given interest rate, there is an inverse relationship between a borrower's probability of default and the lender's expected return. As the likelihood of default increases, the calculated expected return for the lender decreases.
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Ch.6 The financial sector: Debt, money, and financial markets - The Economy 2.0 Macroeconomics @ CORE Econ
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Inverse Relationship Between Default Probability and Expected Return
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Learn After
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