Describe two conflicts of interest that occur in creditrating agencies.
Question:
Describe two conflicts of interest that occur in creditrating agencies.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (QA)
Credit rating agencies play a crucial role in financial markets by assessing the creditworthiness of entities issuing debt securities However conflicts of interest can arise due to the nature of their business model and relationships with clients Here are two common conflicts of interest IssuerPays Model One of the primary conflicts of interest in credit rating agencies stems from their reliance on the issuerpays model In this model the entities seeking credit ratings pay the rating agencies for their services This creates a potential conflict because the agencies may feel pressure to provide favorable ratings to maintain or attract business from issuers If rating agencies were too stringent in their assessments they risk losing clients to competitors who may offer more lenient ratings As a result theres an inherent incentive for rating agencies to provide ratings that please issuers potentially compromising the independence and accuracy of their assessments Structured Finance Products Another conflict ...View the full answer
Answered By
PALASH JHANWAR
I am a Chartered Accountant with AIR 45 in CA - IPCC. I am a Merit Holder ( B.Com ). The following is my educational details.
PLEASE ACCESS MY RESUME FROM THE FOLLOWING LINK: https://drive.google.com/file/d/1hYR1uch-ff6MRC_cDB07K6VqY9kQ3SFL/view?usp=sharing
3.80+
3+ Reviews
10+ Question Solved
Related Book For
Economics Of Money Banking And Financial Markets
ISBN: 9780134734200
5th Edition
Authors: Frederic Mishkin
Question Posted:
Students also viewed these Business questions
-
Describe two conflicts of interest that occur in accounting firms.
-
Describe two conflicts of interest that occur when underwriting and research are provided by a single investment firm.
-
Describe two conflicts of interest that occur in universal banks.
-
Conduct online research for federal income tax brackets for the current year. Which tax bracket do you fit into for your gross household income? How close is your gross household income to the next...
-
a. What would cause a business person to make an unethical decision? b. What are the risks of doing so?
-
Draw the Bode plot and identify the corner frequency, as well as the asymptotic approximations of magnitude for low-frequency and high-frequency ranges. \(G(s)=\frac{\frac{2}{5}}{2 s+5}\)
-
In Example 6. 20, we found a bound on the lowest eigenvalue for the given eigenvalue problem. a. Verify the computation in the example. b. Apply the method using \[y(x)=\left\{\begin{array}{cc} x, &...
-
Valdespin Company manufactures three sizes of camping tentssmall (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and management is...
-
SD69: Memo #8 Dated September 30, 2019 Assess finance charges for overdue accounts. SD70: Memo #9 Dated September 30, 2019 Prepare adjusting entries for supplies and prepaid expenses for September:...
-
Conflicts of interest always reduce the flow of reliable information. Is this statement true, false, or uncertain? Explain your answer.
-
Some commentators have attributed the demise of Arthur Andersen to the combination of auditing and consulting activities provided by the firm. Is this assessment correct?
-
Determine the missing amount for each of the following: Assets Liabilities Stockholders'Equity $357,500 $592,500 $255,000 a. + b. $300,000 C $ 56,200 $11,875
-
The function has a critical point at (0, 0). What is the value of A at this critical point? A = What type of critical point is it? ? k(x, y) = e cos(4x)
-
Using the first fit (FF) bin-packing algorithm to pack the following weights into bins that hold no more than 9 lbs, how many bins do you need? 9 lbs, 5 lbs, 7 lbs, 2 lbs, 4 lbs, 5 lbs, 1 lb, 1 lb, 3...
-
create a professional profile that is tailored to a specific marketing career opportunity. Keep in mind that the goal of an online professional profile is to attract potential stakeholders that can...
-
As flextime, consulting, telecommuting, and downsizing make it more difficult for people to donate blood at the workplace, Canadian Blood Services has launched a CRM marketing campaign in Toronto to...
-
Clonex Labs, Incorporated, uses the weighted - average method in its process costing system. The following data are available for one department for October: Units Percent Completed Materials...
-
Pear Computer Company manufactures a desktop and portable computer through two production departments, Assembly and Testing. Presently, the company uses a single plant-wide factory overhead rate for...
-
Starr Co. had sales revenue of $540,000 in 2014. Other items recorded during the year were: Cost of goods sold ..................................................... $330,000 Salaries and wages...
-
27. The minimum wage, if it is binding, lowers the incomes of B. only those workers who cannot find jobs. D. all workers. A. no workers. C. only those workers who have jobs.
-
Jack sells homemade chocolates and cookies. He expects the price of chocolates to increase around Valentine's Day, so he prepares to make more chocolates in February. Which economic concept lies...
-
The force developed in hydraulic systems is high due to _ _ _ _ a ) high pressure b ) more oil c ) less pressure d ) less oil
Study smarter with the SolutionInn App