Question

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

a. Moody's is the sole provider of bond ratings.
b. Investment grade bonds include only those bonds receiving an A or higher rating.
c. A "fallen angel" is a bond that fell from an A rating or above to a BBB rating.
d. Bond ratings consider the potential price volatility of a bond.
e. Bond ratings only assess the possibility of default.

Answer 1

Option c is correct: a "fallen angel" is a bond that fell from an A rating or above to a BBB rating.

Step-by-step explanation:

The correct statement concerning bond ratings is option c. A "fallen angel" is a bond that fell from an A rating or above to a BBB rating. Moody's is not the sole provider of bond ratings, as there are other rating agencies such as Standard & Poor's and Fitch Ratings. Investment grade bonds include those bonds that have a rating of BBB or higher, not just A or higher. Bond ratings consider factors such as the creditworthiness and risk associated with a bond, including the potential price volatility.