Question-56: What are the types of Credit risk?

Answer: There are following types of credit risk

• Default risk
• Credit-spread risk
• Downgrade risk.

Question-57: What is the use of Credit Risk model?

Answer: Using Credit risk models you can estimate the probability distribution of losses for a bond portfolio.

Question-58: For measuring the bond portfolio risk, what you use?

Answer: Portfolio risk measures include

• Statistical measures of return
• Tracking error risk.

Question-59: What all are the statistical measure are used for a bond portfolio and benchmark?

Answer: Statistical measures of portfolio and benchmark risk include the

• Standard deviation
• Skewness

Question-60: What is tracking error risk for a bond portfolio?

Answer:  Tracking error risk is the standard deviation of the active return of a bond portfolio.