If a bond is rated AA, which category is it in?

If a bond is rated AA, which category is it in?

• A. Upper Medium Grade
• B. Medium Grade
• C. High Grade
• D. Low Grade

Answer: (C)

Credit ratings express how likely a borrower is to meet its obligations, with ratings ranging from the highest quality down to high risk. The AA rating sits in the top tier, just below the very top AAA. Rating agencies describe this level as High Grade, signaling a very low risk of default and strong capacity to pay. It is clearly higher quality than categories described as Upper Medium Grade, Medium Grade, or Low Grade, which correspond to progressively greater risk. So AA is considered High Grade because it denotes high credit quality and low credit risk.

Credit ratings express how likely a borrower is to meet its obligations, with ratings ranging from the highest quality down to high risk. The AA rating sits in the top tier, just below the very top AAA. Rating agencies describe this level as High Grade, signaling a very low risk of default and strong capacity to pay. It is clearly higher quality than categories described as Upper Medium Grade, Medium Grade, or Low Grade, which correspond to progressively greater risk. So AA is considered High Grade because it denotes high credit quality and low credit risk.