A bond with a Moody's rating of Aaa and and S&P rating of AAA will have a higher required return than a bond with an unstable price a Moody's rating of Aa1 and and S&P rating of AA+.

Question

Quizplus · Accepted Answer

A bond with a Moody's rating of Aaa and an S&P rating of AAA is considered to have the highest credit quality and lowest default risk. Therefore, it is likely to have a lower required return than a bond with a lower credit rating such as Aa1 and AA+. A lower credit rating indicates a higher default risk, leading to a higher required return or yield to compensate for the risk.

A Bond with a Moody's Rating of Aaa and And S&P