💶 Assessing credit risks

🧭 Background & Context Credit risks describe the danger that a debtor – such as a government, a company or a bank – fails to meet its interest and principal obligations, either entirely or in part. For private investors, this risk is central because it is embedded in many investment forms: in bonds, money market funds, savings bonds, but also indirectly in equities, funds and insurance products. Anyone who can assess credit risks understands what default probability lies behind a return and whether the yield premium justifies taking on that risk. This assessment is therefore a fundamental building block of every investment decision, not just for classic fixed-income securities. 🔍 How It Works in Detail Credit risks become visible through ratings and market prices. Rating agencies classify debtors into categories ranging from very safe to highly speculative. …