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Finance Dictionary and Glossary of Investment Terms
A rating based on the possibility of default by a bond issuer. The ratings range from AAA (highly unlikely to default) to D (in default). See: Rating, investment grade.
A specification of the possibility of default by a bond issuer based on an analysis of the issuer's financial condition and profit potential.
A measure of the quality and safety of a bond, based on the issuer's financial condition. More specifically, an evaluation from a rating service indicating the likelihood that a debt issuer will be able to meet scheduled interest and principal repayments. Typically, AAA is highest (best), and D is lowest (worst).
A grade on creditworthiness given to a bond by one of the big rating agencies, such as Moody''s or Standard & Poor''s. The top ratings, some variant of A or AAA, signify the greatest likelihood that bondholders will be paid interest and get return of principal, but bonds with these ratings usually pay the least interest. Risk and reward are related, after all.