You Are Trying to Evaluate Two Bond Issues

question 84

Essay

You are trying to evaluate two bond issues.One bond issue is rated "A" by Moody's; the other is rated "B." How important are the bond ratings issued by Moody's Investors Service? Based on your feedback,would you purchase the "A" bond or the "B" bond?

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Definitions:

Receivables Portion

The part of a company's assets that represents money owed to the company by customers for goods or services delivered or used but not yet paid for.

Balance Sheet

A financial statement summarizing a company's assets, liabilities, and shareholders' equity at a specific point in time.

Financial Statements

Comprehensive reports created to present a business's financial performance and position, typically including the balance sheet, income statement, and cash flow statement.

Note Receivable

A formal agreement in which one party promises to pay another a specific sum of money, typically with interest, by a certain date.