Series 66 Quiz
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INVESTMENT VEHICLE CHARACTERISTICS
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Which of the following statements regarding bond credit risk is true?
A
A bond rated BB by S&P is classified as investment grade because BB falls within the top four credit rating categories and reflects a low probability of default.
B
A downgrade of a corporate bond from A to BBB will generally reduce the bond's price and raise its yield to maturity because investors will demand a wider credit spread.
C
Credit spreads on corporate bonds typically widen during economic expansions because issuers face a higher risk of default as economic activity rises.
D
Credit risk is the risk that a bond's market price will decline when market interest rates rise, a risk that is measured by the bond's duration.
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