Which of the following statements is not true regarding bond ratings?
A) The ratings assigned are meant to indicate the probability of default for the bond issuer.
B) The bonds assigned one of the top four rating classes are considered investment grade bonds.
C) Once a rating is assigned to an issue it cannot be changed for the first two years after which it is reviewed on a regular basis.
D) Bonds rated BB and below are referred to as high yield or "junk" bonds.
E) The rating agencies modify the ratings with + and - signs or numbers after the letters.

Question

Quizplus · Accepted Answer

This statement is not true as bond ratings are subject to change at any time based on the financial performance and creditworthiness of the issuer. Ratings agencies review the ratings on a regular basis and may change them if they believe it is necessary.

Which of the Following Statements Is Not True Regarding Bond