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

A higher rating indicates a lower risk of default, making the bond more attractive to investors. As a result, the demand for the bond is likely to increase.

If a Bond's Rating Improves, We Would Expect