FRM Part I · FRM Exam Part I · Corporate Bonds
Which of the following issuers' bonds is classified as investment grade under the S&P rating scale?
BBB- is the correct choice because it is the lowest investment-grade rating on the S&P scale. Ratings of BB+ and below, including B- and CCC, are speculative grade, also called high yield or junk.
- ABB+
- BBBB-Correct
- CB-
- DCCC
Explanation
On the S&P scale, investment grade runs from AAA down to BBB-. BB+ and below are speculative grade (high yield). BBB- is the lowest investment-grade rating.
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