Homework Answers
Bond ratings must be BBB or BBB above in order to be considered as investment grade bonds because these bonds will be having higher repayment ability and they are considered for investment for long period of time by standard and poor and Moody.
All the other options are false.
Correct answer will be option( D) BBB
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What is the minimum rating required for a bond to be considered investment grade? AA OA...
What is the minimum rating required for a bond to be considered investment grade? Question 10...
What is the minimum rating required for a bond to be considered investment grade? Question 10 options: AA A BB BBB None of the above.
The highest S&P bond rating category considered to be of junk quality grade is: в А....
The highest S&P bond rating category considered to be of junk quality grade is: в А. ААА B. BBB- C. BB+ D.CCC+ E. None of the above In contrast to System 1 thinking, System 2 thinking is focused on intuition, feelings, and unconscious thought. True False
10. Bond ratings Aa Aa Rating agencies-such as Standard & Poor's (S&P), Moody's Investor Service, and...
10. Bond ratings Aa Aa Rating agencies-such as Standard & Poor's (S&P), Moody's Investor Service, and Fitch Ratings-assign credit ratings to bonds based on both quantitative and qualitative factors. These ratings are considered indicators of the issuer's default risk, which impacts the bond's interest rate and the issuer's cost of debt capital. Based on these ratings, bonds are classified into investment-grade bonds and junk bonds. Which of the following bonds is likely to be classified as a junk bond? OA...
A firm with an AA-rating plans to issue one million units of a 10 year-4% bond...
A firm with an AA-rating plans to issue one million units of a 10 year-4% bond with face value $100. After the financial crisis this firm is downgraded to a B-rating. The yield curve increases 0.2% per year. The yield for year 1 is yı=1%, for year 2 is y2=1.2%, y3=1.4% and so on and y10=2.8%. The default spreads are given in the table below. (a) What is the initial amount (before downgrading) the firm wants to raise? [2p] How...
What is the lowest grade of the investment grade bonds? AAA BBB B С D None...
What is the lowest grade of the investment grade bonds? AAA BBB B С D None of the above
Credit Rating Yield AAA 3% AA 3.2% A 3.5% BBB 3.8% BB 4.5% B 5.25% a....
Credit Rating Yield AAA 3% AA 3.2% A 3.5% BBB 3.8% BB 4.5% B 5.25% a. Given the yields for bonds with different credit ratings, what would be the fair price of a 5-year maturity bond, which currently has identical risk to a bond rated ‘A’, if it has a coupon rate of 12% paid annually, and a par value of $1,000? b. What would be the price of the bond 3 years from today if the bond is expected...
Using calculating formula Credit Rating Yield AAA 3% AA 3.2% A 3.5% BBB 3.8% BB 4.5%...
Using calculating formula Credit Rating Yield AAA 3% AA 3.2% A 3.5% BBB 3.8% BB 4.5% B 5.25% a. Given the yields for bonds with different credit ratings, what would be the fair price of a 5-year maturity bond, which currently has identical risk to a bond rated ‘A’, if it has a coupon rate of 12% paid annually, and a par value of $1,000? b. What would be the price of the bond 3 years from today if the...
1. What are considered investment-grade bond ratings according to Moody's and Standard & Poor's? ( 10...
1. What are considered investment-grade bond ratings according to Moody's and Standard & Poor's? ( 10 points )
5. Why are bond ratings important? A. A bond rating is an indicator of its default...
5. Why are bond ratings important? A. A bond rating is an indicator of its default risk, has a direct influence on the bond’s interest rate and the firm’s cost of debt B. Higher-grade bonds have a higher required rate of return C. Institutional bond holders are usually not allowed to buy bonds who ratings are below BBB D. A and C above
What are the ratings of investment grade bonds, and at what rating does 'junk' begin? What...
What are the ratings of investment grade bonds, and at what rating does 'junk' begin? What factors separate the two types of bonds? Which type of bond do you think will pay higher interest?
The highest S&P bond rating category considered to be of junk quality grade is: в А. ААА B. BBB- C. BB+ D.CCC+ E. None of the above In contrast to System 1 thinking, System 2 thinking is focused on intuition, feelings, and unconscious thought. True False
10. Bond ratings Aa Aa Rating agencies-such as Standard & Poor's (S&P), Moody's Investor Service, and Fitch Ratings-assign credit ratings to bonds based on both quantitative and qualitative factors. These ratings are considered indicators of the issuer's default risk, which impacts the bond's interest rate and the issuer's cost of debt capital. Based on these ratings, bonds are classified into investment-grade bonds and junk bonds. Which of the following bonds is likely to be classified as a junk bond? OA...
A firm with an AA-rating plans to issue one million units of a 10 year-4% bond with face value $100. After the financial crisis this firm is downgraded to a B-rating. The yield curve increases 0.2% per year. The yield for year 1 is yı=1%, for year 2 is y2=1.2%, y3=1.4% and so on and y10=2.8%. The default spreads are given in the table below. (a) What is the initial amount (before downgrading) the firm wants to raise? [2p] How...
What is the lowest grade of the investment grade bonds? AAA BBB B С D None of the above
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