Bonds and stocks are all securities, the difference being stockholders or owners of a company while bondholders are deemed, lenders.
A government bond is a debt security issued by a government to support government spending and obligations. Bonds play a critical role in balancing portfolios and general economies. Investors are thus encouraged to take on bonds and stocks concurrently. Returns on bonds may be lower than stocks, but they are safer protected ways of investing in securities. The level of its duration can quantify the interest rate of bonds.
Moody’s Investors Service provides international financial research on bonds issued by commercial and government entities. Moody’s, along with Standard & Poor’s and Fitch Group, is considered one of the Big Three credit rating agencies.
According to Moody’s, the purpose of its ratings is to “provide investors with a simple system of gradation by which future relative creditworthiness of securities may be gauged.” To each of its ratings from Aa through Caa, Moody’s appends numerical modifiers 1, 2, and 3; the lower the number, the higher-end the rating.