Question

At any point in time, the market yield to maturity on a BBB-rated 10-year corporate bond will always exceed the market yield to maturity on a AAA-rated 10-year corporate bond.

True

False

Answer 1

This Statement is TRUE.
YTM of BBB rated 10 years Corporate bonds will always exceed the market yiels tok maturity on a AAA rated 10 year corporate bonds.
BBB Bonds are more riskier ,higher default of risk as compared to AAA bonds , so they provide higher YTM as compared to AAA bonds. AAA bonds are much more safer and a high degree of creditworthiness, lower default risk.
Lowest the investment grade, lower the ratings of the company, therefore higher the Yield of the bond.

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