Which of the Following Rated Bonds Has the Most Risk

question 30

Multiple Choice

Which of the following rated bonds has the most risk?

• A)Aaa
• B)Aa
• C)Baa
• D)Ba

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Definitions:

Fixed Asset

Long-term tangible property or equipment that a firm owns and uses in its operations to generate income, not expected to be consumed or converted into cash within a year.

Cash Payback Method

A capital budgeting technique that estimates the time required to recoup the initial investment in a project, using cash inflows.

Average Rate of Return

A financial metric used to estimate the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.

Capital Investment Analysis

The process of assessing the profitability and risk of potential investment opportunities in capital assets.