As the rating of a bond increases (for example, from A, to AA, to AAA), it generally means that
A) the credit rating increases, the default risk increases, and the required rate of return decreases.
B) the credit rating increases, the default risk decreases, and the required rate of return increases.
C) the credit rating increases, the default risk decreases, and the required rate of return decreases.
D) the credit rating decreases, the default risk decreases, and the required rate of return decreases.
Answer: C
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