Answer (A) is correct . Debt ratings are based on the probability of default and the protection for investors in case of default.
Answer (B) is incorrect because The size of the company is relevant only insofar as it bears upon the probability of default.
Answer (C) is incorrect because The size and the type of issue are relevant only insofar as they bear upon the probability of default.
Answer (D) is incorrect because The firm’s industry is relevant only insofar as it bears upon the probability of default.
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