Why Do Investors Pay Attention to Bond Ratings and Demand

question 59

Essay

Why do investors pay attention to bond ratings and demand a higher interest rate for bonds with low ratings?

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Definitions:

Child Labor

The employment of children in any work that deprives them of their childhood, interferes with their ability to attend regular school, and is mentally, physically, socially, or morally harmful.

Interstate Commerce

The exchange of goods, services, or money between states within a country, regulated at the federal level to promote economic equality and efficiency.

Federal Employment Practices

Policies and practices instituted by the federal government to manage, regulate, and oversee the hiring, working conditions, and rights of federal employees.

Popular Front

A broad coalition of different political groups, usually including left-wing parties, organized to oppose fascism or other authoritarian regimes.