Which of statement incorrect regarding corporate investment

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Problem 1: Which one of the following statement is incorrect regarding Corporate Investment grade bonds?

Group of answer choices

Option 1: Corporate Investment grade bonds are more likely to be issued by firms with higher debt ratio and lower P/E ratio

Option 2: Corporate Investment grade bonds are more likely to underperform High Yield bonds as economy recovers from a downturn.

Option 3: Credit rating agencies provide investment grade rating for a bond, if the probability of default by the issuing firm is low.

Option 4: AAA rated corporate bonds have higher correlation with government bonds than with BB rated high yield bonds.

Option 5: A Corporate Investment grade bond with the same maturity as a High Yield bond will have a higher modified duration than the High Yield bond.

Reference no: EM132976855

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