As the Rating of a Bond Increases (For Example,from A,to

question 20

Multiple Choice

As the rating of a bond increases (for example,from A,to AA,to AAA) ,it generally means that ________.

• A)the credit rating increases,the default risk increases,and the required rate of return decreases
• B)the credit rating increases,the default risk decreases,and the required rate of return increases
• C)the credit rating increases,the default risk decreases,and the required rate of return decreases
• D)the credit rating decreases,the default risk decreases,and the required rate of return decreases

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Definitions:

Number 1

Often represents the first in a series or a winner in a competition; in mathematics, it's the natural number that follows 0 and precedes 2.

Factors

Numbers or quantities that can be multiplied together to produce another number, often used in breaking down numbers into their elemental parts.

Lowest Terms

The simplest form of a fraction, where the numerator and denominator are reduced to their smallest possible integers.