An AAA Bond Has Lower Default Risk Than a BBB

question 21

True/False

An AAA bond has lower default risk than a BBB bond.

---

Definitions:

Price

Price is the amount of money that must be paid to acquire a good or service.

Consumer Surplus

The gap between what consumers are ready and able to spend for a good or service and the actual amount they pay.

Willingness to Pay

The maximum amount an individual is prepared to expend on a good or service, reflecting the value they place on it.

Consumer Surplus

The discrepancy between the total sum consumers are prepared and capable of spending on a product or service and what they end up spending.