A company that retains a high bond rating during a recession in which many other companies see their bond ratings cut will experience
A)an increased flow of funds into the market for its securities.
B)an increased demand for its securities, driving up the expected return on them.
C)a decreased demand for its securities, driving down the expected return on them.
D)a decreased flow of funds into the market for its securities.

Question

Quizplus · Accepted Answer

A company that maintains a high bond rating during a recession demonstrates its stability and creditworthiness, which makes it attractive for lenders and investors looking for a safe haven for their funds. As a result, such a company is likely to receive an increased flow of funds into the market for its securities, as investors seek to diversify their portfolio and reduce their exposure to riskier assets. This increased demand for its securities will also help to keep the expected return on them high, as investors are willing to pay a premium for the security and stability that this company provides.

A Company That Retains a High Bond Rating During a Recession