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Bonds 201: Junk Bonds

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1.
Bonds with the highest grade are rated _______.
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AAA. Bonds least likely to default are graded "AAA."
2.
When inflation is high, bond prices _______.
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Decrease. When inflation goes up, bond prices decrease to be more attractive to buyers.
3.
Credit analysis includes researching a company's entire industry.
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True. Looking at other companies in the same industry is part of credit analysis.
4.
The debt-to-equity ratio measures a company's debt compared to its _______.
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Stock value. The debt-to-equity ratio is the ratio between a company's debt and its stock value.
5.
In general, when interest rates _______, bond prices _______.
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Go down/increase. Bondholders can increase the prices of their bonds when interest rates fall, because their bonds will still have higher rates and will therefore be in demand.