Document1 - Word (Product Activation Failed) REFERENCES MAILINGS REVIEW VIEW What factors have favorable effect on bond rating? Choose and answer one question only (6 marks) a. In respect to the main principles of finance, what is the most important principles during this corona pandemic time? Explain how Or: b. Discuss two of the main principles of finance?

1. Factors which having positive impact on the bond ratings are-

A. Higher creditworthiness of the company will be leading to a positive credit rating of the company.

B. Better future cash flows and better corporate performance for the company in future is also leading to a higher credit rating.

C. When the bonds are insured by the collateral then it will be having a higher credit rating as well.

D. When the yield spread is narrowing and corporate bonds are having similar yield to that of the Government Bonds then it will be leading to a better Bond rating.

E. When the coupon rate on the bonds are lower, it will mean that the bonds are having a higher creditworthiness and it will be leading into a higher credit rating as well.

F. When there will be a higher credit repayment ability and there will be a lower inflation and lower interest rate, then also the overall Bond rating will be positively impacted.