Investor Glossary-defaultInsightful stock market charts - Click here

 # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z     
Term of the Day Email this Definition Link to this Definition

Default


Default can be generally defined as a failure of a debtor to make timely payments of principal and interest. Thus, when one is in default, a person or a company is said to default on a loan or other official financial obligation. Default also occurs when a debtor fails to sufficiently meet any timely provisions of a bond, mortgage, lease, or futures contract. Before extending credit, banks, lenders, as well as debt and equity issuing entities take into consideration default risk, i.e. a possibility that a company or an individual will not honor a debt commitment. Some borrowers with higher-than-average default risk must pay a compensatory default premium. Default premium would constitute a higher bond yield offered by a company with scanty financial tenets. Default premium is also frequently paid by individuals with poor credit, typically in a form of above-market interest rates.

Rate this default definition...

               


Where is the market headed? The answer may surprise you. Find out
right now with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: EBITDA, liquidity ratio, 401a, deferred tax, command economy, 144a, per diem, margin rate, deferred revenue, required rate of return, cancelled check, open position, stock split, ex-dividend, implied volatility, in escrow, irrevocable trust, limit order, quality assurance, risk management, 1035 exchange, Key Rate Duration, class C shares, current ratio, Zero Cost Collar, 1031 exchange, wholly-owned subsidiary, VIX, reverse mortgage, retained earnings, phantom income, option premium, minority interest, labor relations, ex-dividend date, covered put, real GDP, LIBOR, inflation, dividends payable, diluted share, debt service coverage, balance sheet, APR, equities, average price per share, FICO score, FTSE, stock market close


Home | Term of the Day | Tell a Friend | Suggest a Term | Edit Subscriber Detail
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2009 Investor Glossary - All rights reserved - Terms of Use