Series 50: Credit Risk

Taken from our Series 50 Online Guide

Credit Risk

Credit risk is the risk that an issuer’s perceived or actual creditworthiness will drop, causing a reduction in demand for the bond and a fall in its price. In a worst-case scenario, the issuer will default. A bond’s credit risk is evaluated and graded by the credit rating agencies Standard & Poor’s, Fitch, and Moody’s. Credit risk is nonsystematic risk.

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