Question
Sometime after ABC Corporation finalized its bond issue, the company learns that Dominion Bond Rating Service (DBRS) has increased its credit rating from A to
Sometime after ABC Corporation finalized its bond issue, the company learns that Dominion Bond Rating Service (DBRS) has increased its credit rating from "A" to "AA". What impact will this new credit rating have on ABC's ability to raise funds?
A) ABC will have to pay a higher coupon rate on its bonds since investors will know it is a successful company
B) ABC will have a harder job raising funds as investors will expect a higher rate of return
C) ABC will be able to pay off its bonds faster as the company can lower the coupon rate on its existing bonds
D) ABC will be able to pay a lower coupon rate on its new bonds as investors will understand it is a more creditworthy company
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