Bond ratings Flashcards
1
Q
The term high-yield bond would apply to a bond with a Moody’s rating of
A) Baa. B) BB. C) Ba. D) BBB.
A
C) Ba
Explanation
High-yield bonds are those whose ratings fall below investment grade. Investment grade is the top four. Using Moody’s descriptions, ratings run from Aaa to Aa to A to Baa to Ba to B and then below. The first rating below the top four is Ba. That is equivalent to a BB rating from Standard & Poor’s (but the question asks specifically about Moody’s).
LO 4.f
2
Q
T/F: A rating of BBB is the lowest investment-grade rating assigned by S&P.
A
True