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What does a bond's rating mean?

Bond Ratings

Before you leap into bond investing, look at a bond's rating to get a good idea of how risky the bond is. Bond ratings are issued by several different ratings institutions. Each institution has a slightly different method for rating, so look into a few different ratings to get a good overall picture of a bond's safety.

In general, the safest bonds will have a rating that begins with A, such as AAA or Aa1. The more risky a bond becomes, the further down the alphabet its rating is until it reaches D for default.

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