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.

---

Definitions:

Consideration

Consideration refers to something of value that is exchanged between parties in a contract, making the agreement legally binding.

Gross Inadequacy

A significant disparity or insufficiency, often relating to an offer’s value in a contractual agreement, which may lead to questioning the fairness of the contract.

Consideration

Something of value exchanged between parties in a contract, which is necessary for the contract to be legally binding.

Sufficient Consideration

The value that is deemed adequate by the parties involved and law as part of an agreement or contract, ensuring it is binding and enforceable.