- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 14. Credit Risk
- Subject 2. Credit Rating Agencies and Credit Ratings
CFA Practice Question
Which statement is false?
B. Credit spreads tend to lag behind credit ratings.
C. In a bankruptcy, junior creditors may receive more consideration than they are legally entitled to.
A. The higher the credit rating, the greater the rating stability.
B. Credit spreads tend to lag behind credit ratings.
C. In a bankruptcy, junior creditors may receive more consideration than they are legally entitled to.
Correct Answer: B
Credit spreads move more quickly than credit ratings of bonds.
Senior creditors may want to settle with junior creditors.
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