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Finance Dictionary and Glossary of Investment Terms
The likelihood that the rating of a bond will drop due to an event, such as the taking on of additional debt or a recapitalization by a company.
1. Unpredictable risk due to unforeseen events partaken by or associated with a company.2. The risk associated with changing portfolio value due to large swings in market prices.
The risk that the ability of an issuer to make interest and principal payments will change because of rare, discontinuous, and very large, unanticipated changes in the market environment such as (1) a natural or industrial accident or some regulatory change or (2) a takeover, or corporate restructuring.