If Standard & Poor\'s ratings of a firm\'s bonds is below BBB, the _____. defaul
ID: 1175601 • Letter: I
Question
If Standard & Poor's ratings of a firm's bonds is below BBB, the _____.
default risk premium associated with the bonds will be less than the risk premium associated with bonds rated AAA
default risk associated with the bonds is less than that of bonds that are rated AAA
firm will find it difficult to find potential investors when issuing new bonds
firm will easily find investors when issuing new bonds because bonds with high yields have no risk associated with them
firm will immediately have to exercise the call provision and issue new bonds
a.default risk premium associated with the bonds will be less than the risk premium associated with bonds rated AAA
b.default risk associated with the bonds is less than that of bonds that are rated AAA
c.firm will find it difficult to find potential investors when issuing new bonds
d.firm will easily find investors when issuing new bonds because bonds with high yields have no risk associated with them
e.firm will immediately have to exercise the call provision and issue new bonds
Explanation / Answer
firm will find it difficult to find potential investors when issuing new bonds
since the chance of default for these bonds are higher
firm will find it difficult to find potential investors when issuing new bonds
since the chance of default for these bonds are higher