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
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education