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credit risk versus default risk/premiums

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    • Avatar of googs1484googs1484
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        • CFA Level 3
        21 Apr 2018 at 5:20 pm
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        I know this is elementary but for whatever reason some of the basic stuff I’ve lost in learning the complicated things. Credit risk, is composed of 3 other types of risks, maturity, default and liquidIty. Credit risk plus real rate and inflation is the expected rate of return. Is that right? 

      • Avatar of tkttkt
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          • CFA Level 3
          22 Apr 2018 at 8:53 am
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          Acccording to the CFA Curriculum:

          Required rate of return on a security = real risk-free rate + inflation premium + default risk premium + liquidity risk premium + maturity risk premium.

          The CFA Curriculum didn’t categorize “default + liquidity + maturity” as credit risk, so I couldn’t comment if that’s right.

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