Hi there,
I was having trouble in the suitability chapter for bonds, particularly when it came to quickly identifying investment grade and junk bonds.
Instead of memorizing the entire chart, I came up with the following method:
- “A’s = Alone.” Any rating that has only has the letter “A” is considered investment grade (e.g., A, AAA, AA).
- “Three with a B”. Any three letter rating with a B in it, is investment grade (e.g. BBB, BBA.)
All other ratings that don’t fit these two rules are speculative. While this is extremely helpful, also remember to read the question carefully. Example: “Which is the highest investment grade rating?” is a very different question from, “Which is the highest grade rating?”.
I cannot speak to whether FINRA even tests for this, however, it could still prove useful to quickly grasp bond ratings, if needed. 