Multiple choice

The most important factor look for when investing in a corporate fixed deposit is the

  1. yield

  2. rate of interest

  3. credit rating of the deposit

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When investing in corporate fixed deposits, credit rating is the most critical factor as it indicates the issuer's ability to repay principal and interest. Higher-rated deposits are safer, while lower-rated ones offer higher yields but carry default risk. Yield and interest rate are important but secondary to safety, which is best judged by credit rating.

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