Rating elements and symbols, Financial Management

Assignment Help:

Rating Elements

A rating agency earns its reputation by assessing the client's operational performance, managerial competence, management and organizational set-up, and financial structure. It should be an independent company with its own identity. It should have no government interference. Rating of an instrument does not give any fiduciary status to the credit rating agency. It is desirable that the rating is done by more than one agency for the same kind of instrument. This will attract investors' confidence in the rating symbol given.

Rating Symbols

Since the ratings of the agencies will be used even by lay investors, the outcome of the rating should be delivered in an understandable manner. To facilitate this, rating symbols are provided. These rating symbols must be easily comprehensible to the investors to enable them to take investment decisions. The investor will not have to depend wholly on the broker's advice as the rating symbol gives a clue to the credibility of the issuer. Different rating agencies use different symbols and distinct symbols will be assigned to different securities. The rating symbols, however, will have to be clear and definite without any ambiguity or scope for misinterpretation.


Related Discussions:- Rating elements and symbols

What is the maximum additional short-term funding, B.J. Industries has a cu...

B.J. Industries has a current ratio of 2.5, with $2.5 million in current assets.  Due to sales growth, the company wants to expand accounts receivable and inventories by

Currency swap, How exchange of principal and interest in one currency? E...

How exchange of principal and interest in one currency? Expalin

Call provisions, The issuer's right to call back the issue before the...

The issuer's right to call back the issue before the maturity date is referred to as a "call provision". In case of asset-backed securities, the trustee is grante

Cash outflows and income statement of a company, a. You only need to compl...

a. You only need to complete the 2012 column, leave the 2011 column as is. b. Base you net income and certain other information needed from the income statement you completed in

Just-in-time inventory management, Q. Just-in-time inventory management? ...

Q. Just-in-time inventory management? It considerably improves the short-term liquidity of the business with a maximum financing requirement of $138533 rather than $155640. The

Deseasonalizing a time series, Deseasonalizing a Time Series The Ratio...

Deseasonalizing a Time Series The Ratio to Average Method allows us to identify the component of the seasonal variation in time series data and the indices themselves help us

Factors considered for analyzing sovereign rating, Table 1:  ...

Table 1:  Politics Stability of the existing government structure National/provincial government r

What is certified financial planner, Q. What is Certified Financial Planner...

Q. What is Certified Financial Planner? Certified Financial Planner (CFP) - Individuals who are trained to develop and implement financial plans for businesses, individuals and

What is marginal cost of capital, What is Marginal cost of capital Marg...

What is Marginal cost of capital Marginal cost of capital, by contrast refers to incrementalcost associated with new funds raised by firm. Marginal cost is the specific conc

Common size and index analysis, sk company had the following balance sheets...

sk company had the following balance sheets and income statements over the last 3 years

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd