Which of the following corporate debt ratings are ordered in terms of decreasing market interest rate?
A) AAA, A, BB, C
B) A, AAA, BB, C
C) BB, C, A, AAA
D) C, BB, A, AAA
E) None of the above

Question

Quizplus · Accepted Answer

Market interest rates are inversely related to the credit quality of the debt. AAA-rated bonds are considered the safest and thus have the lowest interest rates, while C-rated bonds are riskier and have higher interest rates. The correct order from highest to lowest interest rate, reflecting decreasing credit quality, is C, BB, A, AAA.

Which of the Following Corporate Debt Ratings Are Ordered in Terms