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, resulting in a higher expected return.
C) a decreased demand for its securities, resulting in a lower expected return.
D) a decreased flow of funds into the market for its securities.

Question

Quizplus · Accepted Answer

A company with a high bond rating during a recession is seen as less risky, and therefore more attractive to investors. This will likely result in an increased flow of funds into the market for its securities as investors seek out safe havens for their capital.

A Company That Retains a High Bond Rating During a Recession