Author Question: Which of the following is NOT an action or consequence of the activities of bond rating agencies? (Read 12 times)

haydenjmcm · **on:** Aug 7, 2023

Question 1

Which of the following is considered the dominant law when a firm with liabilities exceeding $5 million is declaring bankruptcy?

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Companies’ Creditors Arrangements Act

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Bankruptcy and Insolvency Act

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Federal Bankruptcy Code

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International Financial Reporting Standards

Question 2

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

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In assessing the rating, the agency examines both qualitative and quantitative factors.

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When a material change is identified in any of the factors used to measure a bond’s default risk the agency will not adjust immediately to changes in credit quality, and in some cases there can be a considerable lag between a change in credit quality and a change in rating.

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With respect to qualitative factors, the agency will pay particular attention to important provisions, including whether the bond is secured by a mortgage on specific assets, whether the bond is subordinated to other debt, or any sinking fund provisions.

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Rating agencies review outstanding bonds on a periodic basis and re-rate if necessary.

Harsh06 · **Reply #1 on:** Aug 7, 2023

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