The Credit Ratings Provided by Ratings Agencies

question 94

Multiple Choice

The credit ratings provided by ratings agencies:

• A)play a role in overcoming information asymmetry in the financial markets
• B)are an informed opinion on the credit standing of a debt issue
• C)are paid for by the security's issuer
• D)were found to be unreliable (in relation to mortgage-related securities)during the GFC.
• E)All of these.

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Definitions:

Poor Reliability

Describes a measure or test that fails to produce consistent and stable results over time.

Self-Esteem

An individual’s subjective evaluation of their own worth or the attitude toward oneself ranging from positivity to negativity.

Scores

Numerical expressions representing a measurement or assessment result, often used in the context of tests or evaluations.

Good Validity

The extent to which a test or assessment measures what it is supposed to measure accurately.