Products & Their RisksQuestion 44 of 398
Which of the following bond ratings represents the LOWEST credit risk?
a.BB
b.B
c.CCC
d.AAA
Explanation
AAA is the highest rating agencies assign, indicating the strongest capacity to pay and therefore the lowest credit risk. BB, B, and CCC are all below investment grade and carry progressively higher default risk.
Practice all 398 questions free — no signup required.
Related questions on this topic
- An investor buys a bond at par with a 4% coupon. If market rates later drop to 2%, the market value of the investor's bond will most likely:
- Nominal yield on a bond refers to:
- Duration is a measure that helps investors estimate:
- The line between 'investment grade' and 'non-investment grade' (high-yield) bonds generally falls at:
- If a rating agency downgrades a company's bonds, the most likely immediate effect on those existing bonds is that their:
- Credit (default) risk refers to the possibility that:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review