QUIZ: Investing in Bonds

How well do you understand bond credit ratings?

1. Bond credit ratings tell you:
2. The rating given by a credit agency is set for the life of the bond.
3. Bonds with the highest quality credit ratings always carry the lowest yields.
4. Why does the price of a bond fall when its credit rating is downgraded?
5. Bonds with a good margin of safety are rated:
6. Which bonds have no risk of default?
7. It is usually safer to buy bonds with maturities of five to 10 years rated at least investment grade or higher than long-term bonds with the highest rating.