question archive 1) Which of the following most accurately describes credit rating agencies: i) They provide an unbiased assessment of firm default risk
1) Which of the following most accurately describes credit rating agencies: i) They provide an unbiased assessment of firm default risk
Subject:BusinessPrice:3.87 Bought7
1) Which of the following most accurately describes credit rating agencies:
i) They provide an unbiased assessment of firm default risk.
ii) The announcement of their ratings' changes often moves the YTM of corporate bonds.
iii) Unlike in school, a "D" is the best credit rating a firm's bond can receive and an "A" is the worst.
iv) There are conflict of interest issues due to the way they get paid for their work.
A) i).
B) ii) & iv).
C) ii).
D) ii), iii) & iv).
2. A bond is issued on January 1, 2020 and pays its coupons once annually. Its coupon rate is 4.7%, its maturity is 2 years, its face value is $1,000, and it is purchased at par on January 1, 2020. What is the rate of return from January 1, 2020 until January 2, 2021 if the bond is selling at a yield to maturity of 3.6% by January 2, 2021?
A) 1.06%.
B) 2.82%.
C) 5.73%.
D) 5.76%.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer:
1. A) i). (A credit rating agency is a company that reviews the creditworthiness of an entity that is in the process of or has already issued debt.)
2. B) 2.82%.
PFA
