Explanation:
Any security with a rating below BBB by S&P or Baa by Moody’s is a speculative or non-investment grade instrument.
(Book 4, Module 50.1, LO 50.a)
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Question 47
A junior bond analyst at XYZ Investments is examining both investment-grade bonds and speculative-grade bonds. In particular, he is looking for bonds located below the separation between these two bond classifications. Which of the following bonds would be classified as a speculative grade bond?
A
FHLMC discount note.
B
ACC rail bond rated Baa.
C
OMC Corp. MTN rated BB.
D
Traveler’s floating-rate note rated Aa.