ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Bonds that are given a higher credit rating are considered investment-grade and are the most sought after by investors. Bonds with a low credit rating are known as non-investment grade or junk bonds. Due to the higher risk of default, they typically pay 4 to 6 points higher interest rates than investment-grade bonds.

Detailed explanation-2: -Investors typically group bond ratings into 2 major categories: Investment-grade refers to bonds rated Baa3/BBB-or better. High-yield (also referred to as “non-investment-grade” or “junk” bonds) pertains to bonds rated Ba1/BB+ and lower.

Detailed explanation-3: -Junk bonds are a kind of bond or debt investment that is rated below investment grade. The junk bond rating means that there is a greater risk that the issuer will default on the debt, relative to investment-grade bonds.

Detailed explanation-4: -Treasury bills, also known as T-bills, are short term government bonds. They are issued for maturity within one year. The government issues these bonds in three categories, i.e. 91 days, 182 days and 364 days. The investors do not get coupon payments.

Detailed explanation-5: -Treasury Bills. Cash Management Bills (CMBs) Dated Government Securities. State Development Loans. Treasury Inflation-Protected Securities (TIPS) Zero-Coupon Bonds. Capital Indexed Bonds. Floating Rate Bonds.