CFA Practice Question

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CFA Practice Question

Which statement is false?

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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