Other things being equal, the yield required on A-rated bonds should be ____ the yield required on B-rated bonds whose other characteristics are exactly the same.
A) greater than
B) equal to
C) less than
D) All of the above are possible, depending on the size of the bond offering.

Question

Quizplus · Accepted Answer

A-rated bonds are considered less risky than B-rated bonds, so investors would demand a lower yield (less return) for A-rated bonds compared to B-rated bonds with the same characteristics.

Other Things Being Equal, the Yield Required on A-Rated Bonds