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?
Homework Answers
The ratings of the investment grade bonds begin with AAA and include AA and A and BBB. The junk bonds have ratings below BBB, so the junk bonds begin with BB and include CCC, CC, C and D.
The credit risk involved in these bonds separate the two bonds , the investment grade bonds are more secure and carries less credit risk. The investor money in safe with these bonds and the default risk is low.
The junk bonds have a higher default rate and carries a higher credit risk. The junk bonds will pay a higher interest due to the higher risk involved in these bonds.
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What are the ratings of investment grade bonds, and at what
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