Final answer:
Investors in commercial mortgage-backed securities (CMBS) face balloon risk, which is most likely a type of credit risk. Balloon risk refers to the risk that a borrower will be unable to make the final payment (balloon payment) on a loan.
Step-by-step explanation:
Investors in commercial mortgage-backed securities (CMBS) face balloon risk, which is most likely a type of credit risk. Balloon risk refers to the risk that a borrower will be unable to make the final payment (balloon payment) on a loan. In the context of CMBS, it relates to the risk of default on the underlying commercial mortgage loans, which could result in reduced income or loss of principal for the investors.