How Did a Change in the Business Model for Bond

question 25

Multiple Choice

How did a change in the business model for bond rating agencies contribute to a conflict of interest today?

• A)Bond rating agencies now sell manuals of financial data to the purchasers of bonds.
• B)Bond rating agencies are paid a fee by the federal government.
• C)Bond rating agencies are now paid by the bond issuers.
• D)Bond rating agencies now make roughly half their income from those who purchase bonds and half from those who issue bonds.

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Definitions:

Tax Shelters

Investment vehicles or strategies used to reduce taxable income or tax liability, legally or otherwise, often through deductions, exemptions, or deferrals.

Earnings Gap

The disparity in income between different groups of people, often based on gender, race, or educational attainment.

College Graduates

Individuals who have completed a degree program at a college or university.

High School Education

The stage of formal learning typically occurring after primary education and before tertiary education, usually for adolescents.