- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 29. Credit Analysis Models
- Subject 1. Modeling Credit Risk and the Credit Valuation Adjustment
CFA Practice Question
True or false? It is possible that the default risk on a debt is high but its credit risk is low.
Correct Answer: True
It's possible that the default risk (the likelyhood of an event of default) is high, but the expected loss is low so its credit risk is low. e.g. a debt with a high-value collateral.
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