Which of the following statements about credit ratings is/are true? Statement I. Speculative Grade bonds (aka High Yield bonds) are those rated BB+ and below by Standard & Poor’s (S&P) or Fitch, and Ba1 and below by Moody’s. Statement II. Investment grade securities typically carry a higher risk of default compared to speculative grade securities. Statement III. Large companies with strong and stable cash flows are likely to be rated higher than small companies with more volatile cash flows. A. II only B. III only C. I and III D. II and III
Which of the following statements about credit ratings is/are true? Statement I. Speculative Grade bonds (aka High Yield bonds) are those rated BB+ and below by Standard & Poor’s (S&P) or Fitch, and Ba1 and below by Moody’s. Statement II. Investment grade securities typically carry a higher risk of default compared to speculative grade securities. Statement III. Large companies with strong and stable cash flows are likely to be rated higher than small companies with more volatile cash flows. A. II only B. III only C. I and III D. II and III
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
8th Edition
ISBN:9781285065137
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 9Q: In Chapter 7, we saw that if the market interest rate, rd, for a given bond increased, the price of...
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33.Which of the following statements about credit ratings is/are true?
Statement I. Speculative Grade bonds (aka High Yield bonds) are those rated BB+ and below by Standard & Poor’s (S&P) or Fitch, and Ba1 and below by Moody’s.
Statement II. Investment grade securities typically carry a higher risk of default compared to speculative grade securities.
Statement III. Large companies with strong and stable cash flows are likely to be rated higher than small companies with more volatile cash flows.
Statement I. Speculative Grade bonds (aka High Yield bonds) are those rated BB+ and below by Standard & Poor’s (S&P) or Fitch, and Ba1 and below by Moody’s.
Statement II. Investment grade securities typically carry a higher risk of default compared to speculative grade securities.
Statement III. Large companies with strong and stable cash flows are likely to be rated higher than small companies with more volatile cash flows.
A. II only
B. III only
C. I and III
D. II and III
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