According to Moody's, a bond rated A should provide investors with a higher yield than an otherwise identical bond rated B.

Question

Quizplus · Accepted Answer

This statement is false. The rating of a bond reflects the issuer's ability to pay back the debt, not the yield the bond should provide. The yield of a bond is typically determined by market conditions such as interest rates, inflation, and supply and demand, among other factors. Therefore, two identical bonds with different ratings may offer the same yield or even the opposite.

According to Moody's, a Bond Rated a Should Provide Investors