Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

Financial Accounting

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

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Multiple Choice

Which one of the following statements concerning bond ratings is correct?

Bond ratings are assigned by government agencies.

A lower bond rating indicates a lower risk of default.

Bond ratings provide investors with an assessment of the credit risk associated with a particular bond issue.

Bond ratings are determined solely by the issuing company's stock price performance.

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Verified step by step guidance

Understand the concept of bond ratings: Bond ratings are assessments provided by rating agencies (such as Moody's, S&P, and Fitch) to evaluate the creditworthiness of a bond issuer and the likelihood of default on the bond's payments.

Clarify the role of government agencies: Bond ratings are not assigned by government agencies; they are determined by independent rating agencies based on financial analysis and other factors.

Analyze the relationship between bond ratings and risk: A lower bond rating indicates a higher risk of default, not a lower risk. This is because lower ratings signify weaker creditworthiness.

Evaluate the connection between bond ratings and stock price performance: Bond ratings are not determined solely by the issuing company's stock price performance. They are based on a broader analysis of financial health, including debt levels, cash flow, and economic conditions.

Identify the correct statement: Bond ratings provide investors with an assessment of the credit risk associated with a particular bond issue. This is the accurate description of the purpose of bond ratings.