of superior merit, i.e., of low financial risk (risk of nonpayment if
obligations, and risk of lack of earnings and nonpayment of dividends
obligations of governmental units and such bonds of seasoned corporations
as are protected by well-established and adequate earning power, in addition
to being secured by underlying mortgages if secured obligations, belong
to this class. In general,
the securities of the Federal government, the states, and political subdivisions
thereof, as well as the senior bonds of seasoned railroad, public utility,
and industrial corporations, will be found assigned the highest investment
rating, but variations in such quality will be found among the "municipals."
In their respective groups, the strongest preferred and common
stocks may be characterized as high-grade.
furnish a quick and convenient measure of quality, the statistical rating
services - Moody's, Standard & Poor's, and Fitch - have developed
BOND RATINGS to indicate quality; Standard & Poor's has developed
quality ratings for stocks, both preferred and common.
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