Which of the following statement about bond ratings is TRUE?
Correct answer: C. Bond ratings represent an independent assessment of the credit-worthiness of bonds.
- A. Bond ratings are typically paid for by a company's bondholders.
- B. Bond ratings are based solely on information acquired from sources other than the bond issuer.
- C. Bond ratings represent an independent assessment of the credit-worthiness of bonds.
- D. None of the given options
Explanation
A bond rating is an independent agency’s assessment of the issuer’s ability to repay debt and interest, expressed through credit grades. Ratings are commonly paid for by issuers, so option a is incorrect.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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