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Part $1$

Coinbase operates an exchange on which investors can buy and sell cryptocurrencies like Bitcoin and Ethereum. According to an article on yahoo.com in January$2023,$ Standard$$ & Poor's$($S&P$)$ cut its rating on$$ Coinbase's bonds from BB to

BBminus$.$

$$Source: Helene$$ Braun, "Coinbase Junk Bonds Further Downgraded by$$ S&P on Weak$$ Profitability, Regulatory$$ Risks,"$$yahoo$.$com, January$11,2023.$

Part $2$

What is$$ S&P$\text{'}$s top bond$$ rating?

A$.$

BBB

B$.$

BB

C$.$

AAA

D$.$

DD

Part $3$

Under what circumstances would$$ S&P$,$ or the other bond rating$$ agencies, be likely to cut the rating on a$$ firm's bonds?

A$.$

when the firm has stability in top management positions

B$.$

when the firm experiences large sales growth

C$.$

when the firm is confident it will be able to repay its debt

D$.$

None of the above.

Part $4$

The likely result of this$$ rating's cut will be

A$.$

Coinbase will have to pay a lower interest rate when it sells bonds.

B$.$

Coinbase will have to pay a higher interest rate when it sells bonds.

C$.$

Coinbase will have an easier time financing its fiscal deficit.

D$.$

Coinbase will have an easier time financing its trade deficit.