A bond rating is really a measure of a bond's

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A bond rating is a measure of a bond's riskiness, or the likelihood that the bond issuer will default on their loan obligations. It is assigned by credit rating agencies based on the issuer's financial stability, creditworthiness, and ability to meet interest and principal payments. Bonds with higher ratings (such as AAA) are considered lower risk and therefore offer lower interest rates, while bonds with lower ratings (such as D) are considered higher risk and therefore offer higher interest rates to compensate for the increased likelihood of default.

A Bond Rating Is Really a Measure of a Bond's