Is it true that Environmental, Social, and Governance factors correlate with credit ratings, with high yield bonds having more lower-rated issuers and investment grade bonds having higher-rated issuers, and that bonds are distinct from stocks?Group of answer choicesTrueFalse

Have credit rating agencies started integrating ESG factors into their rating methodologies?Group of answer choicesThe purpose of credit ratings is to assess the likelihood of a company repaying its debt. Whilst ESG may be a factor; the pandemic showed that health concerns don’t impact bond ratingsESG factors haven't been a direct component of issuers’ final credit ratings as governance is already incorporated and the most crucial element for bondsThe sustainability debate has come under increasing focus for several corporate sectors, and therefore, credit rating agencies have had to incorporate ESG themes into their credit rating methodologiesNext

Which are the benefits of credit-rating to investors?a.All of theseb.Saving of resourcesc.Credibility of issuesd.Safeguard against bankruptcy

Which of the following statement is true? • Corporate bond yields are generally lower than government bond yields for bonds having the same coupon rate and maturity. • The spread of junk bond yields over that of Australian Government Bond is generally lower than the spread of investment-grade bonds over that of the Australian Government Bond. Once a bond defaults, bondholders can no longer receive any residual payment from the bond. • Two bonds have the same maturity, risk rating, and face value, but have different coupon rates. The bond with a lower coupon rate carries greater risks.

Please give examples of how bond yields and investor views differ when a company's credit risk is high or low.

High-yield bond analysis differs from investment-grade bond analysis in that high-yield:A.analysis is less likely to focus on an issuer’s liquidity.B.covenant analysis is more important than for investment-grade bonds.C.bond prices are more affected by interest rate changes than higher-quality bonds.