LO 2.c

Question 1

Investment Grade Debt

Answer 1

Bonds rated in top 4 categories BBB or Baa or higher. The only quality purchased by institutions (banks, insurance companies) and by fiduciaries. Habe great liquidity than lower grade instruments.

Question 2

High Yield Bonds

Answer 2

Called junk bonds, lower ratings BB or Ba or less. Additional risk of default. Volitility higher than investment grade. Higher return potential, speculative fixed income investments.

Question 3

Non rated bonds

Answer 3

Too small to justify paying for a bond rating. Investor has to reasearch on their own.