Principles of Finance

The risk of a decline in income due to a drop in interest rates is called interest rate risk. True False Question 6 (1 point) Double- B and lower-rated bonds are speculative (or junk) bonds, which have a significant probability of going into default. True False There is a positive relationship between bond ratings and the required return on a bond. The required return is highest for AAA-rated bonds, and required returns decrease as the ratings get lower. True False