The rating agencies have analyzed the creditworthiness of Company XYZ and have determined that the company currently has adequate payment capacity, although a negative change in the business environment could affect its capacity for repayment. The company has been given an investment grade rating by S&P and Moody’s. Which of the following S&P/Moody’s ratings has Company XYZ been assigned?
 
A. AA/Aa
 
B. A/A
 
C. BBB/Baa
 
D. BB/Ba
 
Answer:C
 
The interpretation given by the above statement refers to a rating of BBB/Baa, which is a lower investment grade rating. A rating of BB/Ba is not investment grade, an AA/Aa rating is a very high investment grade rating and an A/A rating still reflects a strong capacity to make payments.

 
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