Question
Darnit Corporation issued 30 year bonds 5 years ago. At the time the bonds were issued, the bonds were rated A by Moodys bond rating
Darnit Corporation issued 30 year bonds 5 years ago. At the time the bonds were issued, the bonds were rated A by Moodys bond rating service. Today, Moodys upgraded its rating on the Darnit Corporation Bonds to AA. You would expect the price of the Darnit bonds to:
:
a. | To decrease since a AA rating is a lower rating than a A rating, thus indicating more risk | |
b. | To increase since a AA rating is a higher rating than a A rating, thus indicating less risk | |
c. | To remain unchanged, since the bond is already outstanding | |
d. | To remain unchanged, since bond ratings do not influence the price of bonds | |
e. | It is difficult to tell, because no information is given why the rating changed |
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