Which of the Following Statements Is not True Regarding Bond

question 19

Multiple Choice

Which of the following statements is not true regarding bond ratings?

• A) The ratings assigned are meant to indicate the probability of default for the bond issuer.
• B) The bonds assigned one of the top four rating classes are considered investment grade bonds.
• C) Once a rating is assigned to an issue it cannot be changed for the first two years after which it is reviewed on a regular basis.
• D) Bonds rated BB and below are referred to as high yield or "junk" bonds.
• E) The rating agencies modify the ratings with + and - signs or numbers after the letters.

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Definitions:

Groupthink

A psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Social Facilitation

The tendency for people to perform differently when in the presence of others than when alone, typically showing improved performance on simple or well-rehearsed tasks.

Reciting

Speaking aloud from memory, often practiced with poems, speeches, or other text materials.

Improved Performance

The enhancement of one's ability to execute a task or activity better than before, often through practice, training, or other interventions.