- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 14. Credit Risk
- Subject 2. Credit Rating Agencies and Credit Ratings
CFA Practice Question
Standard and Poor's issues a report that Altra X Inc.'s bonds have been added to the group of bonds to be analyzed for a possible ratings downgrade. This is an example of ______.
B. credit spread risk
C. downgrade risk
A. default risk
B. credit spread risk
C. downgrade risk
Correct Answer: C
Downgrade risk occurs when a specific issue or issuer comes under the scrutiny of the credit rating agencies.
User Contributed Comments 3
| User | Comment |
|---|---|
| magicchip | And the outcome will depend on how "nicely" the S&P analyst was treat by the folks at Altra. Last I heard the analyst was on a pricy cruise ship spending some $$ at the casino tables. |
| thekid | Magicchip: funny, i heard the same. lol |
| rocyang | Don't you like that? :) |