Just like in school, when I got a grade for my book report, bonds get grades based on their quality. Moody’s, Standard & Poor’s and Fitch hand out the grades. The grades range from AAA to C. Conveniently, the bond makers pay these companies to grade them. Wouldn’t school have been easier if I had been paying my teacher?
(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)