Which One of the Following Statements Concerning Bond Ratings Is

question 327

Multiple Choice

Which one of the following statements concerning bond ratings is correct?

• A) Standard and Poor's and Value Line are the primary bond rating agencies.
• B) Bond ratings are solely an assessment of the creditworthiness of the bond issuer.
• C) Investment grade bonds include only those bonds receiving one of the highest three bond ratings.
• D) Bond ratings evaluate the expected price volatility of a bond issue.
• E) All bonds receive the same rating classification from all rating agencies.

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Definitions:

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is recorded at cost and adjusted for dividends received and the investor's share of the investee's profit or loss.

Consolidation

The process of combining the financial statements of separate subsidiary entities into one comprehensive financial statement of the parent company.

Goodwill

An intangible asset that arises when one company acquires another for a premium value, representing the excess of the purchase price over the fair market value of the identifiable assets and liabilities.

Indefinite Life

An intangible asset's useful life that is not limited to a predetermined period and could extend indefinitely.