Ask A Fool: How Much Riskier Are Lower-rated Bonds?

The general concept of bond ratings is easy to understand. Bonds are rated by three main agencies (S&P, Moody's, and Fitch), and lower ratings imply more risk. However, many investors don't realize the differences in risk and yield between each rating level. (Note: For this discussion, I'm using the S&P rating system of AAA, AA, A, B, etc.)The highest-rated bonds, AAA, are extremely unlikely to default.

Topics:  s&p   moody's   fitch     note   aaa-rated   s&p   aaa   aa   a-rated   bbb-rated   bonds   default   ratings   rating   extremely   risk   rates   

 

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