Which of the Following Is NOT an Action or Consequence

question 69

Multiple Choice

Which of the following is NOT an action or consequence of the activities of bond rating agencies?

• A)In assessing the rating, the agency examines financial ratios, contract terms (restrictive covenants), and important qualitative factors.
• B)When a material change is identified in any of the factors used to measure a bond's default risk, the agency will immediately announce a change in the rating.
• C)With respect to qualitative factors, the agency will pay particular attention to ratios, measuring return on assets, interest coverage, and operating profit margins.
• D)While it is the mandate of the agency to report on the creditworthiness of securities held by bondholders, their findings are also relevant to the firm's shareholders.

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Definitions:

Sublimation

A defense mechanism in which socially unacceptable impulses or idealizations are unconsciously transformed into socially acceptable actions or behavior.

Aggressive Nature

A predisposition or behavior characterized by readiness to confront or attack.

Psychosexual Stages

A Freudian theory that proposes child development progresses through a series of stages oriented around the erogenous zones.

Personality Development

The growth and development of the organized pattern of behaviors and attitudes that makes a person distinctive over their lifetime.