REVIEW FOR FINAL

Explain why answer is B

and the rules or things that make the answer B

Bonds with "investment grade" ratings are considered to have low default risk and are generally issued by entities with good credit quality. Bonds with "speculative grade" ratings are considered to have higher default risk and are issued by entities with poorer credit quality. Given this information, which of the following statements is most correct? U.S. Treasury bonds are considered speculative grade bonds. The yield-to-maturity of a speculative grade bond will generally be higher than the yield-to- maturity of an investment grade bond. Form the bondholder's perspective, investment grade bonds are generally more risky than speculative grade bonds. Most zero-coupon bonds have speculative grade ratings. The yield-to-maturity of an investment grade bond will generally be higher than the yield-to- maturity of a speculative grade bond