CFA Level 1: Study Session 15. Fixed Income (2) - Reading 47. Fundamentals of Credit Analysis

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	1. Credit Risk a. describe credit risk and credit-related risks affecting corporate bonds; b. describe default probability and loss severity as components of credit risk;
	2. Seniority Ranking and Priority of Claims c. describe seniority rankings of corporate debt and explain the potential violation of the priority of claims in a bankruptcy proceeding;
	3. Credit Ratings d. distinguish between corporate issuer credit ratings and issue credit ratings and describe the rating agency practice of "notching"; e. explain risks in relying on ratings from credit rating agencies;
	4. Credit Analysis f. explain the four Cs (Capacity, Collateral, Covenants, and Character) of traditional credit analysis; g. calculate and interpret financial ratios used in credit analysis; h. evaluate the credit quality of a corporate bond issuer and a bond of that issuer, given key financial ratios of the issuer and the industry;
	5. Credit Risk vs. Return: Yields and Spreads i. describe factors that influence the level and volatility of yield spreads;
	6. Special Considerations of High-Yield, Sovereign, and Municipal Analysis j. explain special considerations when evaluating the credit of high yield, sovereign, and municipal debt issuers and issues.

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