Which of the following classes of securities is likely to have the highest corporate borrowing cost? OB rated bonds Crated bonds O A rated bonds O AAA rated bonds

Finance Dec 22, 2020

Expert Solution

Ans- Option 2. C rated Bonds

C rated Rated bonds are low credit grade Bonds but offer higher Yield or have higher borrowing costs.

Bonds rated BB and below are low graded Bonds as they are high risk bonds having high chance of default. They are also known as Junk Bonds. Since, they have high risk the yield or borrowing costs on these Bonds are highest.

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