This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: A higher bond rating usually means a lower yield. Indicate whether the statement is true or ... (Read 50 times)

penguins

  • Hero Member
  • *****
  • Posts: 903
on: Jul 10, 2018
A higher bond rating usually means a lower yield.
 
  Indicate whether the statement is true or false.

Question 2

What type of risk is being rated when bond agencies assign ratings to outstanding debt? What are the two main reasons for having bond agencies rate bonds?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

akpaschal

  • Sr. Member
  • ****
  • Posts: 342
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: TRUE

Answer to Question 2

Answer: Bond rating agencies assess default risk. Bonds are rated by agencies for two primary reasons. First, the agencies are able to provide reliable information to potential investors at a reasonable cost. Without this service, investors would have to develop the resources and expertise to properly access the creditworthiness of thousands of potential bond issuers. Second, from the bond issuer's perspective, issuers of bonds are seeking to send a reliable signal to the market about the firm's ability to meet the financial obligations of the bond issue. Accurate information and a reduction in uncertainty in the marketplace can help raise the price of a bond. Thus, rating agencies, in effect, help market the bond.


penguins

  • Member
  • Posts: 903
Reply 2 on: Jul 10, 2018
Gracias!

pratush dev

  • Member
  • Posts: 321
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

The most common childhood diseases include croup, chickenpox, ear infections, flu, pneumonia, ringworm, respiratory syncytial virus, scabies, head lice, and asthma.

Did you know?

About 80% of major fungal systemic infections are due to Candida albicans. Another form, Candida peritonitis, occurs most often in postoperative patients. A rare disease, Candida meningitis, may follow leukemia, kidney transplant, other immunosuppressed factors, or when suffering from Candida septicemia.

Did you know?

In women, pharmacodynamic differences include increased sensitivity to (and increased effectiveness of) beta-blockers, opioids, selective serotonin reuptake inhibitors, and typical antipsychotics.

Did you know?

Human stomach acid is strong enough to dissolve small pieces of metal such as razor blades or staples.

Did you know?

Ether was used widely for surgeries but became less popular because of its flammability and its tendency to cause vomiting. In England, it was quickly replaced by chloroform, but this agent caused many deaths and lost popularity.

Lower Limbs & Pelvis Lower Limbs & Pelvis
Women who are 65 and older have a lower median income from all sources than men in the same age ... Women who are 65 and older have a lower median income from all sources than men in the same age ...
Transition from the lower to the upper limbs with compression over the drape. Apply compression with ... Transition from the lower to the upper limbs with compression over the drape. Apply compression with ...
Facing the table, place one hand on the thigh and the other on the lower leg. Gently rock the leg ... Facing the table, place one hand on the thigh and the other on the lower leg. Gently rock the leg ...
The Upper (A) and Lower (B) Respiratory Tracts (1 of 2) The Upper (A) and Lower (B) Respiratory Tracts (1 of 2)
Video: Hormonal feedback loop components & Glucagon (glycogenolysis and gluconeogenesis)

For a complete list of videos, visit our video library