If a bond's rating improves, we would expect:
A) the demand for this bond to increase, all other factors constant.
B) the demand for and the yield of this bond to increase, all other factors constant.
C) the demand for this bond to decrease, and its yield to increase, all other factors constant.
D) both the demand for and the price of the bond to decrease, all other factors constant.

Question

Quizplus · Accepted Answer

An improvement in a bond's rating indicates that the creditworthiness of the issuer has increased, making it less risky to invest in. As a result, investors are more likely to want to purchase this bond, leading to an increase in demand.

If a Bond's Rating Improves, We Would Expect