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

Question

Quizplus · Accepted Answer

Bonds with higher credit ratings (such as Aaa and AAA) are considered less risky and therefore have a lower required rate of return. Bonds with slightly lower credit ratings (such as Aa1 and AA+) are considered slightly more risky and therefore have a slightly higher required rate of return.

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