Which of the following are true concerning bond ratings?
I. They have a greater impact on the price and yield of junk bonds than on investment grade bonds.
II. They provide investors with a convenient way to assess the relative risk of various bond issues.
III. They are provided by an independent government agency.
IV. They have a significant effect on a bond's price and yield.
A) I and II only
B) II and IV only
C) III only
D) I, II and IV only

Question

Quizplus · Accepted Answer

I, II, and IV are correct. Bond ratings significantly impact the price and yield of bonds, with a greater effect on junk bonds due to their higher risk compared to investment-grade bonds. They offer a convenient method for investors to evaluate the relative risk of different bond issues. However, bond ratings are not provided by an independent government agency; instead, they are issued by private credit rating agencies such as Moody's, Standard & Poor's, and Fitch.

Which of the Following Are True Concerning Bond Ratings