Asked by Angelica Bihasa on Jun 25, 2024
Verified
Bond ratings issued by DBRS specifically account for default risk.
Bond Ratings
A grade given to bonds that indicates their credit quality, with higher ratings suggesting a lower risk of default.
DBRS
A credit rating agency that evaluates the creditworthiness of entities and their issued debt.
Default Risk
The risk associated with the possibility of a borrower failing to make required payments on their debt obligations.
- Understand the significance of bond ratings and their relation to default risk.
Verified Answer
MA
Mae Anne BurcaJul 01, 2024
Final Answer :
True
Explanation :
Bond ratings issued by DBRS, like those from other credit rating agencies, assess the creditworthiness of issuers and their debt securities, specifically evaluating the likelihood of default, which is the risk that an issuer will be unable to make principal or interest payments when they are due.
Learning Objectives
- Understand the significance of bond ratings and their relation to default risk.