Definition of Investment Grade Security

Applying "Investment Grade Security" to Securities Exams:

There are two major companies that rate bonds for the risk of default: Moodys and Standard and Poors. Investment grade ratings are given to those issuers who have a low or very low risk of default. Moodys investment grade bonds are rated Aaa-Baa and S&Ps are rated AAA-BBB. Any rating below that is considered speculative, and carries a higher risk of default.
As a rule, risk equals reward, so investment grade bonds pay a lower rate of interest to the bondholders than do speculative grade bonds.