Which term describes bonds generally considered investment-grade when rated BBB or higher?

Which term describes bonds generally considered investment-grade when rated BBB or higher?

• A. Investment Bonds
• B. Junk/ Speculative Bonds
• C. Municipal Bonds
• D. Government Bonds

Answer: (A)

The concept being tested is how bonds are categorized by credit rating. When a bond is rated BBB or higher, it falls into the investment-grade group, indicating relatively lower credit risk. The term that describes bonds meeting this BBB-or-higher threshold is investment bonds (often called investment-grade bonds). The other terms describe issuer type or a higher-risk category: junk/speculative bonds are below investment-grade, municipal bonds refer to local-government issuers, and government bonds refer to sovereign issuers. So, investment bonds is the best match for bonds considered investment-grade at BBB or higher.

The concept being tested is how bonds are categorized by credit rating. When a bond is rated BBB or higher, it falls into the investment-grade group, indicating relatively lower credit risk. The term that describes bonds meeting this BBB-or-higher threshold is investment bonds (often called investment-grade bonds). The other terms describe issuer type or a higher-risk category: junk/speculative bonds are below investment-grade, municipal bonds refer to local-government issuers, and government bonds refer to sovereign issuers. So, investment bonds is the best match for bonds considered investment-grade at BBB or higher.