Asked by Stefanie Castro on May 05, 2024
Verified
A change in a corporation's bond rating will:
A) Impact its ability to raise funds in capital markets
B) Increase the cost of borrowing
C) Will always cause rating agencies to downgrade the bond
D) All of the above
E) A and B only
Bond Rating
An assessment of the credit quality of a bond by rating agencies, indicating its creditworthiness.
Capital Markets
Financial markets for buying and selling equity and debt instruments, including stocks and bonds, facilitating capital formation and growth.
Borrowing
The act of obtaining funds from a lender under the agreement to repay with interest.
- Recognize the crucial role and effects of bond ratings on the financial agility of corporations in securing capital.
- Grasp the concepts of bond pricing, yield, and factors affecting bond valuation.
Verified Answer
MB
Martha BonettMay 10, 2024
Final Answer :
E
Explanation :
A change in a corporation's bond rating can impact its ability to raise funds in capital markets and can increase the cost of borrowing. However, it does not always cause rating agencies to downgrade the bond. A change in rating can also result in an upgrade or no change at all.
Learning Objectives
- Recognize the crucial role and effects of bond ratings on the financial agility of corporations in securing capital.
- Grasp the concepts of bond pricing, yield, and factors affecting bond valuation.