What is the average portfolio rating for 30 M in bond A and

What is the average portfolio rating for $30 M in bond A and $45 M in bond B. Rating for Bond A and Bond B are Aa2 and A3 respectively.

Rating Factors:
Aaa 1
Aa1 10
Aa2 20
Aa3 40
A1 70
A2 120
A3 180
Baa1 260
Baa2 360
Baa3 610

a. Aa2
b. Aa3
c. A1
d. A2

Please explain calculation.

Solution

average portfolio rating = (30*20 + 45*180)/75

average portfolio rating = 116

so rating is A2 since 120 is closest

What is the average portfolio rating for $30 M in bond A and $45 M in bond B. Rating for Bond A and Bond B are Aa2 and A3 respectively. Rating Factors: Aaa 1 Aa

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