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The quality ratings assigned to bonds reflect the: A. probabilities of different returns on their sinking...

The quality ratings assigned to bonds reflect the:

A. probabilities of different returns on their sinking fund investments.

B. probabilities of their maturity value becoming lower than the principal value.

C. probabilities of their being recalled by the exercise of a call provision.

D. probability of their face value increasing to above their market value.

E. probabilities of their going into default.

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Answer #1

Option e is correct option because bond ratings are given by rating agencies by taking into consideration on probability of default, debt levels,etc.

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