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Which one of the following statements is true concerning bond ratings? Bond ratings are based only on the risk of default. A bond rated BBB

Which one of the following statements is true concerning bond ratings?

Bond ratings are based only on the risk of default.

A bond rated BBB or lower is considered a junk bond.

All else equal, a bond rated BB should pay a higher return than a bond rated B.

Bond ratings are based on both the risk of default and the interest rate risk.

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