Question

There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is lowest for AAA-rated bonds, and required returns decrease as the bond ratings get higher.A. TrueB. False

Answer 1

A. True

Step-by-step explanation:

The three statement present are correct.

A lower quality bond will need to pay a better return in order to attract investor. as if given the choise, they would purchase better quality if the rate is the same.

The second statemnt, yes the AAA- bonds will have a lower rate. As they are pretty much a risk-free rate

The next bond, which is AAA will have a lower return as is even more solvent to pay.