If Moody's Upgrades a Corporate Bond to AAA, Explain the Impact

question 45

Essay

If Moody's upgrades a corporate bond to AAA, explain the impact on the risk premium.

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Definitions:

Assets

Resources with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

Liabilities

Financial obligations or debts that a company owes to others, which need to be paid back in the future.

Owners' Equity

The portion of a company's assets that belongs to its owners or shareholders, representing their residual interest.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, ultimately providing a view of the company’s profitability.