If a Bond Rating Moves from a BB to a BBB

question 88

Multiple Choice

If a bond rating moves from a BB to a BBB rating

• A) it must also move from a Ba to a Baa rating.
• B) the market yield on the bond will rise.
• C) the market price of the bond will rise.
• D) the bond will still be classified as junk.

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Definitions:

LIFO Conformity Rule

A U.S. tax regulation requiring companies that apply the last-in, first-out (LIFO) inventory costing method for tax reporting to also use it for financial reporting.

Costing Methods

Techniques used to determine the cost of a product or service, such as job costing, process costing, and activity-based costing.

Full Disclosure Principle

An accounting principle requiring that financial statements present all relevant information about the business's financial condition and performance.

FOB Shipping Point

A term used in shipping agreements indicating that the buyer is responsible for the goods and the cost of shipping as soon as the goods leave the seller's premises.