Canadian Securities Course (CSC) Practice Exam · Question
Which of the following would generally lead to a bond having a higher credit rating from agencies like DBRS or S&P?
Higher credit ratings are assigned to issuers deemed to have a lower risk of default. A stable federal government with strong finances is typically the most cre
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Question: Which of the following would generally lead to a bond having a higher credit rating from agencies like DBRS or S&P?
Answer options:
- A company with high leverage and declining revenues. ✅ A federal government with a stable economy and strong fiscal policy.
- A start-up company with unproven products and negative cash flow.
- A municipal bond issued by a city facing significant budget deficits.
Correct answer: A federal government with a stable economy and strong fiscal policy.
Explanation: Higher credit ratings are assigned to issuers deemed to have a lower risk of default. A stable federal government with strong finances is typically the most creditworthy issuer.
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