Non-quantitative facts best predict bond defaults

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Bond rating agencies have invested significant sums of money in an effort to determine which quantitative and non-quantitative facts best predict bond defaults. Furthermore, some of the raters invest time and money to meet privately with corporate personnel to get nonpublic information that is used in assigning the issue’s bond rating. To recoup those cots, some bond rating agencies have tied their rating to the purchase of additional services.

Do you believe that this is an acceptable practice?

Defend your position.

Reference no: EM131445461

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