Products & Their RisksQuestion 45 of 398
The line between 'investment grade' and 'non-investment grade' (high-yield) bonds generally falls at:
a.BBB (or Baa) and above is investment grade; BB (or Ba) and below is high-yield
b.AAA only is investment grade; everything else is high-yield
c.Any bond with a coupon above 5% is high-yield
d.Only unrated bonds are high-yield
Explanation
Bonds rated BBB/Baa and higher are considered investment grade, while those rated BB/Ba and lower are non-investment grade or high-yield. The cutoff is based on rating, not on coupon level or the mere absence of a rating.
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