For corporate bonds, better ratings are generally associated with ____ financial leverage.
A) higher
B) lower
C) risk-neutral
D) zero

Question

Quizplus · Accepted Answer

Better ratings indicate lower credit risk, which means lower probability of default. Issuing companies with better ratings are considered more creditworthy and are able to raise capital at lower interest rates. Lower financial leverage is a sign of sound financial health and stability, which is reflected in higher credit ratings.

For Corporate Bonds, Better Ratings Are Generally Associated with ____