Question

Discuss Bond ratings and what they mean.

Answer 1

A bond is a type of measure used to ascertain the credit worthiness of the borrowing entity. This measures their probability to repay the payments on time with the profits made and the probability of default.

There are three main entities in the world who assign credit ratings which are :-

1. Standards and Poors

2. Moody's

3. Fitch

For example the investment grade or the high credit worthy bonds habe the rating as AAA as per Moody's.

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