Rating elements and symbols, Financial Management

Assignment Help:

Rating Elements

A rating agency earns its reputation by assessing the client's operational performance, managerial competence, management and organizational set-up, and financial structure. It should be an independent company with its own identity. It should have no government interference. Rating of an instrument does not give any fiduciary status to the credit rating agency. It is desirable that the rating is done by more than one agency for the same kind of instrument. This will attract investors' confidence in the rating symbol given.

Rating Symbols

Since the ratings of the agencies will be used even by lay investors, the outcome of the rating should be delivered in an understandable manner. To facilitate this, rating symbols are provided. These rating symbols must be easily comprehensible to the investors to enable them to take investment decisions. The investor will not have to depend wholly on the broker's advice as the rating symbol gives a clue to the credibility of the issuer. Different rating agencies use different symbols and distinct symbols will be assigned to different securities. The rating symbols, however, will have to be clear and definite without any ambiguity or scope for misinterpretation.


Related Discussions:- Rating elements and symbols

Define merger activity in the past decade affected assets, How has the merg...

How has the merger activity in the past decade affected the concentration of assets in the banking industry? A: Over the last decade, some commercial banks declined by twenty-o

Define a callable bond, What is a callable bond?  What is a putable bond?  ...

What is a callable bond?  What is a putable bond?  How do each of these features affect their respective market interest rates? A callable bond may be retired untimely at the dis

Determine the objectives of the firm, Determine the Objectives of the Firm ...

Determine the Objectives of the Firm Objectives of the Firm - Profit Maximisation and Wealth Maximisation To put it simply, we may say that goal of any business is to max

Discuss about the materiality, Discuss about the Materiality An item ca...

Discuss about the Materiality An item can be considered material if its omission would reasonably influence the decisions of an addressee of report, a misstatement is material

Global economy, Global Economy: The size of the world stock market grew...

Global Economy: The size of the world stock market grew steadily in the 1970s and 1980s and crossed the $12 trillion figure in 1993. The share of the US market decreased tremen

Explain compound value of an annuity, Q. Explain Compound Value of an Annui...

Q. Explain Compound Value of an Annuity? Compound Value of an Annuity: - Annuity demotes to the periodic flows of equal amounts. FV = A {(1+i)n - 1}/i Instance: - Mr. X i

Classification of sources of finance, CLASSIFICATION OF SOURCES OF FINANCE ...

CLASSIFICATION OF SOURCES OF FINANCE In the market, there are several sources of finance, with conflicting risk characteristics and with conflicting cost structures. Numerous m

State the term- dealing with general risk, State the term- Dealing with gen...

State the term- Dealing with general risk Part  of  the  strategic  decision  making  process  is  to  analyse  all  risk  factors  involved  with pursuing a specific course of

Tax-backed debt obligations, Tax-backed debt obligations are the debt...

Tax-backed debt obligations are the debt instruments issued by counties, states, cities, towns, special districts and school districts. These are secured by some

Objectives of working capital management, Q. Objectives of working capital ...

Q. Objectives of working capital management? The objectives of working capital management are habitually stated to be profitability and liquidity. These objectives are habitual

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd