The work of bond rating agencies is important because
A) They ensure that all principal and interest payments on bonds issued will be made.
B) The rating they assign proves the quality of a particular debt instrument.
C) They affect the debt's marketability and hence its interest rate.
D) Bonds cannot be issued without them.

Question

Quizplus · Accepted Answer

Bond rating agencies assess the creditworthiness of both debt securities and their issuers. The ratings they provide help investors understand the risk level associated with investing in a particular bond. A higher rating usually means lower risk, which can lead to lower interest rates for the issuer, as the bond is seen as more attractive to investors. This directly affects the marketability of the debt instrument.

The Work of Bond Rating Agencies Is Important Because