Downgrade risk, Financial Management

Market participants' measure the default risk of an issue on the basis of the credit ratings that the credit rating agencies assign to the issues. Once rating is assigned, the agency continuously monitors the credit quality of the issuer and updates the ratings from time to time. Rating agency is empowered to either upgrade or downgrade the ratings. An unexpected downgrade increases the credit spread and a fall in the bond's price. The risk involved here is the downgrade risk and is closely related to credit spread risk.

Posted Date: 9/10/2012 1:23:30 AM | Location : United States







Related Discussions:- Downgrade risk, Assignment Help, Ask Question on Downgrade risk, Get Answer, Expert's Help, Downgrade risk Discussions

Write discussion on Downgrade risk
Your posts are moderated
Related Questions
WHAT IS METHOD FOR FINDING IRR

Accounting to Budget: Accounting to budget is a commonly used term to describe how an organisation controls its accounting process. Typically, an organisation divides its re

1 Explain the difference between a forward start option and a package. Outperformance certificates are offered to investors by many European banks as a way of investing in a com

Uses of Index Numbers 1. Establishes trends Index numbers when analyzed reveal a general trend of the phenomenon under study. The available figures for inflation based

Give two examples of types of companies that would be best able to handle high debt levels. Companies that manage local telephone service and those that manage natural gas deli

Cost-Volume-Profit Analysis The Cost-Volume-Profit (CVP) analysis provides answers to vital questions such as: At what sales volume would the firm break-even? How sensitive is

Determine the important ways of financing Financing could be by two ways: debt (loans from different sources such as financial institutions, banks,public etc.) and equity (capi

What is the meaning of Breakeven point?

Explain Vernon’s product life-cycle theory of FDI. What are the strength and weakness of the theory? Answer:  As to the product life-cycle theory, companies undertake FDI at a ce

Bennis Shafts produces three types of golf club shafts which it sells to golf club manufacturers.  Prepare ONE worksheet to answer the following questions and to determine the outc