Why Are the Bonds with Investment Grade Ratings Generally Not

question 19

Multiple Choice

Why are the bonds with investment grade ratings generally not directly tied to the financial success of the issuing firm?

• A) the ability of the firm to make full and timely interest payments is more tenuous
• B) the returns are immediately not related to the resources of the firm
• C) the firms have the resources to weather possible financial problems
• D) the returns are not insulated from the near-term financial performance of the issuer.

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Definitions:

Recessive Gene

A gene that must be present on both chromosomes in a pair to express a recessive trait, unlike a dominant gene where only one is necessary for the trait to be expressed.

Cystic Fibrosis

A genetic disorder that affects the lungs and digestive system, characterized by thick, sticky mucus that can clog airways and trap bacteria.

Spina Bifida

A developmental abnormality that results in the spine and its protective membranes not fully enclosing the spinal cord.

Lateral

Positioned on, oriented toward, or relating to the side.