When bonds trade at a premium, the current yield is less than the coupon rate. Current yield does not take into account the difference between the purchase price of the bond and the principal repayment at maturity. The bond market is typically less risky than the stock market, although there have been times when bonds are just as risky and volatile as stocks. Ratings of the two major rating services are similar but there are minor differences. Mean Aaa AAA Best quality, with the smallest amount of risk.
Issuers are extremely stable and dependable.
High quality, with a slightly higher degree of long-term risk. A A High to medium quality, with many strong attributes but with some risk exposure to changing economic conditions. Baa BBB Medium quality, currently adequate but with significant risk possible over the long term. Some speculative element, with moderate security but not well safeguarded for the long haul. Caa CCC Poor quality with a clear danger of default.