Question

A customer has a discretionary account at a brokerage firm. The customer calls the registered representative handling the account and states "Buy $50,000 of investment grade corporate bonds" with at least 5 years to maturity and a minimum 8% yield. To comply with the customer's instructions, the registered representative must choose bonds that are rated, at a minimum:

Answer 1

Answer: C. Ваa

Step-by-step explanation:

Moody's is a Credit Rating company that rates Bonds. They have a classification scheme that works with letters with Aaa being the highest rated bonds there are. These are considered the least risky.

After grade Aaa there is grade A and then there is Grade Baa. Grade Baa is considered to be the lowest Investment Grade security there is so if the client asks for anything in investment grade bonds, the minimum rated bonds to buy have to be level Baa.