Bonds rated below BBB are known as what?

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Multiple Choice

Bonds rated below BBB are known as what?

Explanation:
Bond credit ratings separate bonds into investment-grade and non-investment-grade categories. Any bond rated below BBB is considered junk or speculative because it carries a higher risk of default. Investors demand higher yields to compensate for that extra risk, hence the term high-yield or junk bonds. The other phrases don’t fit this concept: investment-grade bonds are rated BBB or higher, government bonds are typically viewed as high quality regardless of rating, and par value refers to the bond’s face amount, not its credit quality.

Bond credit ratings separate bonds into investment-grade and non-investment-grade categories. Any bond rated below BBB is considered junk or speculative because it carries a higher risk of default. Investors demand higher yields to compensate for that extra risk, hence the term high-yield or junk bonds. The other phrases don’t fit this concept: investment-grade bonds are rated BBB or higher, government bonds are typically viewed as high quality regardless of rating, and par value refers to the bond’s face amount, not its credit quality.

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