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Cfa Level II Fixed Income Readings Outline FIXED INCOMESECTION I: GENERAL PRINCIPLES OF CREDIT ANALYSISCredit RiskThere are three distinct types of risks associated with credit riskDefault Risk – Borrow wont repay obligationCredit Spread Risk – Risk that credit spread will increase which causes the issue’s value to decrease or underperform compared to benchmarkDowngrade Risk – Issue will be downgraded.