There is an inverse relationship between bonds' quality ratings and their required rates of return.

Question

Quizplus · Accepted Answer

This statement is true. Bonds with higher quality ratings, such as AAA-rated bonds, are considered less risky and therefore require a lower rate of return compared to lower quality, higher-risk bonds such as junk bonds. The inverse relationship means that as the quality rating of a bond decreases, the required rate of return increases.

There Is an Inverse Relationship Between Bonds' Quality Ratings and Their