Bond Ratings

Discipline: Economics

Bond ratings are ratings that reflect the possibility that a bond issuer will default on its debt.

In an effort to inform the investors of the risks involved, credit rating agencies, such as Moody's or Standard and Poor's, assign bond credit ratings of: AAA, AA, A, BBB, BB, B, CCC, CC, C, D.

The general rule for the bond ratings is, other things being equal, the higher the bond rating, the lower the yield of the bond.

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