- CFA Exams
- 2022 Level I
- Study Session 14. Fixed Income (2)
- Reading 44. Fundamentals of Credit Analysis
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Learning Outcome Statements PDF Download
| 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. compare and contrast 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 macroeconomic, market, and issuer-specific 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 non-sovereign government debt issuers and issues. |
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