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Which bond would you expect to be more expensive a bond with AAA rating or a bond with a BBB rating?
A bond with a AAA rating would generally be expected to be less expensive than a bond with a BBB rating. This is because the AAA rating indicates higher creditworthiness and lower risk of default, making it more attractive to investors. As a result, AAA-rated bonds typically offer lower interest rates.
What is the purchase price of a bond called?
The purchase price of a bond is called the "face value" or "par value" of the bond. This is the amount that the bond issuer agrees to repay the bondholder at maturity.
What causes the price of bond to fluctuate?
The price of a bond fluctuates primarily in response to changes in interest rates. When interest rates rise, bond prices fall, and vice versa. Additionally, factors like credit quality, time to maturity, and market demand can also impact the price of a bond.
What happens When a bond sells at a premium?
When a bond sells at a premium, it means it is sold at a price higher than its face value. This indicates that the bond's interest rate is higher than the current market interest rates. Investors pay a premium to secure a higher yield, which results in a lower effective yield compared to the coupon rate.
When the length of a chemical bond is short what happens?
When the length of a chemical bond is short, it usually indicates a strong bond between the atoms involved. This can result in a higher bond energy, making the bond more stable and less likely to break. Shorter bonds also often correspond to a higher bond strength and a smaller bond angle, which can impact the molecule's geometry and properties.
How do bond rating influence which bond investors buy?
In simple terms, the better the rating the safer the investment.
What happens to a bond's yield if the price of the bond rises?
it rises
If a bond price increases what happens to yield to maturity?
The YTM on a Bond versus it's Price is inversely related. Thus when the Price of the Bond Increases, the YTM Decreases.
Would you prefer to purchase a bond with a high rating at a high price or a bond with a low rating at a lower price?
I would prefer to purchase a bond with a high rating at a high price because it typically indicates lower credit risk and greater likelihood of timely interest payments and principal repayment. While the lower-rated bond may offer a higher yield, it comes with increased risk, which could lead to potential losses. Prioritizing safety and stability in investments is generally more prudent, especially in uncertain market conditions.
How does corporate bond ratings work?
The leading rating agencies give a rating when a bond is first issued, and that rating determines how high the interest rate on that bond is. A higher rating means the bond will have a lower interest rate.
Which bond would you expect to be more expensive a bond with AAA rating or a bond with a BBB rating?
A bond with a AAA rating would generally be expected to be less expensive than a bond with a BBB rating. This is because the AAA rating indicates higher creditworthiness and lower risk of default, making it more attractive to investors. As a result, AAA-rated bonds typically offer lower interest rates.
How do bond ratings influence which bonds investors buy?
In simple terms, the better the rating the safer the investment.
What does the bond credit rating assess?
Bond credit rating is used to assess the credit worthiness of a corporation or government's debt issues. A bond credit rating is similar to a credit rating that an individual person receives.
What is the grade bond rating level UNR?
It stands for unrated. That rating agency does not rate that bond.
When was Dominion Bond Rating Service created?
Dominion Bond Rating Service was created in 1976.
What is a bond rating?
A bond issuer's probability of defaulting
James has purchased a 10-year bond that pays a 50 coupon If interest rates go up what happens?
the bond PRICE will go DOWN
