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Introduction to Financial Markets (405) — CBSE Class 10 board question

Q1. [1]
Are bonds assessed based on their credit quality ?
  1. (A) No, bonds are assessed based on their credit quality.
  2. (B) Yes, bonds are assessed based on their credit quality.
  3. (C) No, most bond and debenture issuances are rated by specialized credit rating agencies.
  4. (D) Yes, RBI is an identity which assesses the bond and debenture issuances.
Previously asked in CBSE board exam
2026 92 Q5 (iii)
Generated by claude-sonnet-4-6 · 2026-06-15 07:06 · grounding rag
Model Answer

(B) Yes, bonds are assessed based on their credit quality.

Most Bond/Debenture issues are rated by specialised credit rating agencies such as CRISIL, CARE, ICRA and Fitch. The yield on a bond varies inversely with its credit rating.

Source: Chapter 4, Section 4.2.2 – Debt Investment

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Explanation

The passage explicitly states that most bond/debenture issues are rated by specialised credit rating agencies, confirming that bonds are assessed based on credit quality. Option (B) is correct. Option (C) is a contradictory statement (says "No" but then gives a correct fact). Option (D) incorrectly credits RBI. Remember: safer bonds carry lower interest rates — yield and credit rating are inversely related.

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