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 a Moody's rating of Aa1 and an S&P rating of AA+.

Question

Quizplus · Accepted Answer

A bond with a higher credit rating (Aaa/AAA) is considered to be safer, and therefore has a lower risk premium and lower required return. A bond with a lower credit rating (Aa1/AA+) is considered to have more risk, and therefore has a higher risk premium and higher required return. Therefore, the statement is false.

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