Some Claim That Ratings Agencies Have a Conflict of Interest

question 59

Multiple Choice

Some claim that ratings agencies have a conflict of interest since:

• A)they rate the quality of their own bonds
• B)since agencies charge firms for their services rather than investors, they have an incentive to give high ratings to gain business
• C)government began to include bond ratings as part of regulations of mutual funds, banks, and financial firms
• D)they issued many of the mortgages that were later securitized into bonds

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Definitions:

Culture

The social behavior and norms found in human societies, including knowledge, beliefs, arts, laws, customs, capabilities, and habits.

Humanist Approach

A psychological perspective that emphasizes individual potential for growth and the concept of free will.

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The combination of characteristics or qualities that form an individual's distinctive character.

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