The need for bond rating Introduction: A bond refers to the debt securities issued by the governments or corporations for raising capital. The borrower does not return the face value until maturity. However, the investor receives the coupons every year until the date of maturity. A bond rating assesses the creditworthiness of the borrowing company. In other words, it is the likeliness of the borrowers’ default in repaying the money.

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Answer 1

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Chapter 7, Problem 8CRCT

Summary Introduction

To discuss: The need for bond rating

Introduction:

A bond refers to the debt securities issued by the governments or corporations for raising capital. The borrower does not return the face value until maturity. However, the investor receives the coupons every year until the date of maturity.

A bond rating assesses the creditworthiness of the borrowing company. In other words, it is the likeliness of the borrowers’ default in repaying the money.

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Answer 2

Question

Chapter 7, Problem 8CRCT

Summary Introduction

To discuss: The need for bond rating

Introduction:

A bond refers to the debt securities issued by the governments or corporations for raising capital. The borrower does not return the face value until maturity. However, the investor receives the coupons every year until the date of maturity.

A bond rating assesses the creditworthiness of the borrowing company. In other words, it is the likeliness of the borrowers’ default in repaying the money.

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Answer 3

Question

Chapter 7, Problem 8CRCT

Summary Introduction

To discuss: The need for bond rating

Introduction:

A bond refers to the debt securities issued by the governments or corporations for raising capital. The borrower does not return the face value until maturity. However, the investor receives the coupons every year until the date of maturity.

A bond rating assesses the creditworthiness of the borrowing company. In other words, it is the likeliness of the borrowers’ default in repaying the money.

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Answer 4

Question

Chapter 7, Problem 8CRCT

Summary Introduction

To discuss: The need for bond rating

Introduction:

A bond refers to the debt securities issued by the governments or corporations for raising capital. The borrower does not return the face value until maturity. However, the investor receives the coupons every year until the date of maturity.

A bond rating assesses the creditworthiness of the borrowing company. In other words, it is the likeliness of the borrowers’ default in repaying the money.

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Answer 5

Chapter 7, Problem 8CRCT

Summary Introduction

To discuss: The need for bond rating

Introduction:

A bond refers to the debt securities issued by the governments or corporations for raising capital. The borrower does not return the face value until maturity. However, the investor receives the coupons every year until the date of maturity.

A bond rating assesses the creditworthiness of the borrowing company. In other words, it is the likeliness of the borrowers’ default in repaying the money.

Answer 6

Chapter 7, Problem 8CRCT

Summary Introduction

To discuss: The need for bond rating

Introduction:

A bond refers to the debt securities issued by the governments or corporations for raising capital. The borrower does not return the face value until maturity. However, the investor receives the coupons every year until the date of maturity.

A bond rating assesses the creditworthiness of the borrowing company. In other words, it is the likeliness of the borrowers’ default in repaying the money.

Answer 7

Chapter 7, Problem 8CRCT

Summary Introduction

To discuss: The need for bond rating

Introduction:

A bond refers to the debt securities issued by the governments or corporations for raising capital. The borrower does not return the face value until maturity. However, the investor receives the coupons every year until the date of maturity.

A bond rating assesses the creditworthiness of the borrowing company. In other words, it is the likeliness of the borrowers’ default in repaying the money.

Answer 8

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Answer 11

Ch. 7.1 - What are the cash flows associated with a bond?Ch. 7.1 - What is the general expression for the value of a...Ch. 7.1 - Is it true that the only risk associated with...Ch. 7.2 - Prob. 7.2ACQ Ch. 7.2 - Prob. 7.2BCQ Ch. 7.2 - Prob. 7.2CCQ Ch. 7.3 - What does a bond rating say about the risk of...Ch. 7.3 - What is a junk bond?Ch. 7.4 - Prob. 7.4ACQ Ch. 7.4 - What do you think would be the effect of a put...

Solution Summary: The author explains that bond rating assesses the creditworthiness of the borrowing company. Large institutional investors cannot invest in unrated bonds.

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Chapter 7 Solutions