Rank the following instruments in terms of credit risk. In your rankings, use 1 for the greatest credit risk and 4 for the smallest credit risk. Assume a 10 year Treasury trades with a YTM of 5%.a. A Ba1 corporate bond ______b. A ten-year BBB- corporate bond with a YTM of 7% ______c. A secured loan from Argosy Gaming, which is a B- rated firm ______d. A senior subordinated bond from Argosy Gaming

Answers

Answer 1

Answer:

a. A Ba1 corporate bond 2 (not investment grade)

b. A ten-year BBB- corporate bond with a YTM of 7% 3 (medium risk but still investment grade)

c. A secured loan from Argosy Gaming, which is a B- rated firm 4 (less risky since it is backed by a collateral)

d. A senior subordinated bond from Argosy Gaming 1 (highest risk)

Explanation:

There are two major bond rating agencies in the US: Moody's and Standard & Poor's.

Their rankings are very similar, although the letters vary a little:

AAA: safest

AA: low risk

A: low risk

BBB: medium risk

BB: a little bit more riskier

B: risky

CCC: very high risk

CC: even riskier

C: riskiest

D: junk, in default


Related Questions

Suppose the U.S. imports cars from the UK​ manufacturer, McLaren. Consider an appreciation of the pound. Which of the following statements correctly describe the effects of this​change?
A. Hold all other prices constant.
B. U.S. consumers pay more dollars for each McLaren car they import from the UK.
C. McLaren supplies a greater quantity of dollars to the foreign exchange market.
D. U.S. consumers increase their purchases of McLaren cars.
E. McLaren's dollar revenues fall.
To peg the pounds per dollar exchange rate at a level higher than the market clearing exchange​ rate, the UK government needs to:_________.
a. buy pounds and sell dollars
b. buy dollars and sell pounds
c. simple announce a target exchange rate

Answers

Answer:

b. and a

Explanation:

Answer:

b. and

Explanation:

Remember, when foreign exchange rates between two currencies of particular country rises (appreciates), it effects is experienced most by the country whose currency hasn't risen. In this case therefore, this would make U.S. consumers pay more dollars for each McLaren car they import from the UK.

Also, to peg the pounds per dollar exchange rate at a level higher than the market clearing exchange​ rate, the UK government needs to buy pounds and sell dollars, because reducing the supply of pounds in the exchange market creates an opportunity for higher exchange prices.

Every organization needs some degree of flexibility and standardization. True False Being overly committed to following rules can harm an organization and keep it from growing. True False Every organization needs either a degree of ________ to adapt to new situations or some degree of ________ to make routine tasks and decisions as efficient and effective as possible. standardization; flexibility culture; vision flexibility; standardization structure; design

Answers

Answer:

1. True: Every organization needs some degree of flexibility and standardization.

2. True: Being overly committed to following rules can harm an organization and keep it from growing.

3. flexibility; standardization.

Explanation:

It is really important and necessary that all organization have some degree of flexibility and standardization. Every organization is expected to be flexible, in order to be able to effectively manage potential changes or challenges that arises in business. They should also be standardized, by having proper policies, strategies and structure for the purpose of running the business smoothly and efficiently.

However, if an organization is overly committed to following rules, this can cause harm to it's business operations and thereby hindering its growth and development.

Hence, some degree of flexibility is needed in every organization in order to adapt to new situations or some degree of standardization to make routine tasks and decisions as efficient and effective as possible.

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