Rating

DEFINITION of 'Rating'

1. An evaluation of a corporate or municipal bond's relative safety from an investment standpoint. Basically, it scrutinizes the issuer's ability to repay principal and make interest payments.

2. An analyst's recommendation on whether to buy, sell or hold a specific stock.

BREAKING DOWN 'Rating'

Bonds are rated by various organizations such as S&P and Moody's. Ratings range from AAA or Aaa (the highest), to C or D, which represents a company that has already defaulted.

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RELATED FAQS
  1. Who or what is backing municipal bonds?

    Learn about the basics of municipal bonds, including the various revenue sources that are utilized to back or secure municipal ... Read Answer >>
  2. How do the returns on municipal bonds compare to those of other bonds?

    Learn how tax-free municipal bonds may provide better returns than other types of bonds, and understand the risks of municipal ... Read Answer >>
  3. In the context of a bond, what does the principal refer to?

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  4. Does a good credit rating guarantee repayment?

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  5. What is a triple tax-free municipal bond?

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  6. What do cities do with the funds generated from municipal bonds?

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